[Federal Register Volume 78, Number 153 (Thursday, August 8, 2013)]
[Notices]
[Pages 48472-48501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19136]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 13-04]


Notice of Entering into a Compact with Georgia

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: In accordance with Section 610(b)(2) of the Millennium 
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium 
Challenge Corporation (MCC) is publishing a summary and the complete 
text of the Millennium Challenge Compact between the United States of 
America, acting through the Millennium Challenge Corporation, and 
Georgia. Representatives of the United States Government and Georgia 
executed the Compact documents on July 26, 2013.

    Dated: August 2, 2013.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Summary of Millennium Challenge Compact with Georgia

    The Millennium Challenge Corporation's Board of Directors (the 
``Board'') has approved a five-year, $140,000,000 compact with the 
Government of Georgia aimed at reducing poverty through economic growth 
(the ``Compact''). The Compact seeks to address one of Georgia's most 
binding constraints to economic growth, the quality of human capital, 
through investments in science and technology education and workforce 
development. MCC's investments are designed to build on Georgia's 
previous compact and reforms that the Government of Georgia has 
undertaken in the education sector. All projects have estimated 
economic rates of return above MCC's hurdle rate of 10 percent.

1. Background

    Georgia's first $395 million compact, which was completed in April 
2011, focused on addressing the basic needs of Georgians through 
investments in infrastructure (roads, water networks and energy 
rehabilitation) and rural private enterprise development through a 
grant program and separate investment fund. As the first compact 
concluded, Georgia was determined by the Board as eligible for a second 
compact in January

[[Page 48473]]

2011 and then again in December 2011 and December 2012.
    Since the 2004 Rose Revolution, Georgia achieved sustained policy 
progress and economic growth, implementing major reforms that have 
strengthened public finances, improved the business environment, and 
enhanced social protection and social services. However, poverty rates 
remain high, increasing from 22.7 percent to 24.7 percent after the 
2008 conflict with Russia. Poverty in Georgia is driven by high 
unemployment, which can be attributed in part to a mismatch between the 
demands of the Georgian labor market and the skills possessed by 
Georgian workers, particularly in sectors that require training in the 
fields of science, technology, engineering and mathematics. The Compact 
seeks to address that mismatch by funding investments in the education 
sector that will help Georgians obtain the education and job skills 
that subsequently lead to greater employment.
    Two key lessons learned from the first compact include: (i) Early 
planning for operations and maintenance (``O&M'') and (ii) working with 
high capacity Georgian government implementing entities where possible. 
In recognition of the importance of O&M planning, the Government of 
Georgia committed to funding and carrying out long-term O&M of all 
Georgian schools, including the schools rehabilitated with Compact 
funds. The first compact demonstrated the Government of Georgia's high 
capacity for implementing a sophisticated investment program. The 
Compact builds on this experience by giving technical responsibility 
for implementation to domestic institutions responsible for the long-
term sustainability of the investments.

2. Program Overview and Budget

    Below is a summary describing the components of the Compact. The 
budget figures below and the expected impacts described in section III 
are based on due diligence and project appraisal.

------------------------------------------------------------------------
                                                             Total ($
                         Project                             million)
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Improving General Education Quality Project.............           76.5
Industry-Led Skills and Workforce Development Project...           16
STEM Higher Education Project...........................           30
Monitoring and Evaluation...............................            3.5
Program Administration..................................           14
                                                         ---------------
    Total Compact Budget................................          140
------------------------------------------------------------------------

    The Compact comprises three projects in the education sector: (1) 
Improving General Education Quality Project, (2) Industry-Led Skills 
and Workforce Development Project, and (3) STEM Higher Education 
Project.
    Improving General Education Quality Project ($76.5 million) seeks 
to improve general education quality in Georgia through infrastructure 
enhancements to the physical learning environment, training for 
educators and school managers, and support to education assessments. 
The project consists of three activities, which were targeted to 
specifically improve math and science learning, and aim to improve the 
pipeline of future students pursuing tertiary education and later 
entering the labor market:
     Improved Learning Environment Infrastructure Activity. 
This activity would involve the full internal and external 
rehabilitation of dilapidated school facilities, utility upgrades, and 
provision of laboratories for approximately 130 existing Georgian 
public schools. The planned rehabilitations address key elements 
correlated with improved educational performance including human 
comfort, indoor air quality and adequate lighting, and will be measured 
by a rigorous impact evaluation.\1\
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    \1\ Schools were targeted according to their proportion of 
socially vulnerable students, the overall condition of a school's 
infrastructure, school utilization rates, and a school's number of 
students.
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     Training Educators for Excellence Activity. This activity 
aims to improve teaching and school management by training 
approximately 23,400 math, science, information and communications 
technology, and English teachers in grades 7-12; 2,000 public school 
principals; and 2,000 school-based professional development 
coordinators (one per public school). Investments would strengthen the 
capacity of staff at the Teacher Professional Development Center, the 
agency under the Ministry of Education and Science responsible for 
teacher training, to manage effective professional development.
     Education Assessment Support Activity. This activity would 
support Georgia's participation in five international assessments, the 
implementation of approximately six national assessments focused on 
math and science, and the development of a system of classroom 
assessment for secondary school math and science teachers. This 
activity would build on USAID's classroom assessment work in Georgia's 
primary schools and also seek to create a system of teacher tools for 
classroom assessment for students and STEM (science, technology, 
engineering and math) teachers in grades 7-12.
    Industry-Led Skills and Workforce Development Project ($16 million) 
aims to improve the linkage between market-demanded skills and the 
supply of Georgians with technical skills relevant to the local 
economy. Georgian industry engaged in the design of this project 
through numerous consultations with the private sector, leading to the 
following activities:
     Competitive Program Improvement Grants Activity. This 
activity would provide an initial investment in programs that develop, 
test, and disseminate innovative and effective approaches to 
employment-oriented skills development in Georgia through a competitive 
grants program for Georgian Technical and Vocational Education and 
Training providers. To build upon the industry engagement already 
established in the compact development process, this activity would 
promote investment from Georgian industry partners. Technical 
assistance would be provided to promote high-quality proposals, build 
capacity, and ensure compliance with MCC requirements.
     Strengthening Sector Policy and Provider Practice 
Activity. This activity would provide technical assistance to 
strengthen sector policy to support industry engagement with the aim of 
matching private sector demand to labor supply. Existing, 
internationally accepted good practices in industry engagement, such as 
tracer studies and industry advisory boards, would be identified and 
promoted to foster linkages and responsiveness to labor market needs.
    STEM Higher Education Project ($30 million) proposes to attract one 
or more international university partners to support the Government of 
Georgia's effort to modernize STEM education by delivering high-quality 
STEM degree programs that boost productivity and growth, and increase 
employment opportunities. The project aims to offer high-quality 
international standard STEM degrees and/or U.S. accreditation of 
Georgian public university degree programs, something not done before 
in Georgia. International partner universities would also bring the 
needed experience to build the capacity of Georgian partners and 
promote equitable participation for women and minorities in STEM 
programs. This approach is consistent with the view of public higher 
education institutions as drivers for education reform in Georgia.
    The project also anticipates supporting Georgian public 
universities in obtaining accreditation from the

[[Page 48474]]

Accreditation Board of Engineering and Technology (``ABET'') to achieve 
high-quality STEM education outcomes. ABET is the U.S. association that 
accredits domestic and international university programs in the 
disciplines of applied science, computing, engineering, and engineering 
technology. A compact investment in ABET accreditation at one or more 
Georgian universities would provide the physical upgrades and technical 
assistance needed to achieve accreditation.

3. Expected Results, Beneficiaries, and Benefits

    MCC and the Government of Georgia collaborated to ensure that 
investment benefits are extended to a broad spectrum of the Georgian 
economy, with a focus on girls' engagement in STEM, the inclusion of 
socially vulnerable populations, and designing to ensure for impact 
evaluation.
    The initial beneficiaries of the Improving General Education 
Quality Project are estimated to be the 186,400 students (33 percent of 
all Georgian students) enrolled in Georgian secondary schools (grades 
7-12) during the first year of Compact implementation. Approximately 
half of the students are female and a significant proportion of 
students are from families deemed socially vulnerable. Over a 20-year 
time horizon, a total of 870,000 students would benefit. Total 
beneficiaries are estimated at 1.6 million, which includes family 
members. Combining all three proposed activities, the project-level 
estimated economic rate of return is 13 percent.
    The number of beneficiaries of the Industry-Led Skills and 
Workforce Development Project over a 20-year time horizon is estimated 
to be 26,000, who would likely be from poorer households, the 
population that has traditionally taken advantage of technical 
vocational training. In particular, social and gender integration would 
be a critical component of technical assistance to training providers 
to support strategies and approaches for ensuring that women and 
members of disadvantaged groups are equitably represented in supported 
programs. The estimated economic rate of return for the Competitive 
Program Improvement Grants Activity is 23 percent.
    The number of beneficiaries of the STEM Higher Education Project 
over a 20-year horizon is estimated to be approximately 31,000 and the 
number of students who would obtain high-quality undergraduate degrees 
in STEM disciplines is estimated at 8,500 students. An indicative 
estimated economic rate of return for this project is based on 
technical and financial proposals received as part of a recent request 
for proposals process. Assuming an operating cost (average annual 
tuition) of $5,500 per student, the project-level estimated economic 
rate of return is 11 percent.

Millennium Challenge Compact Between the United States of America 
Acting Through the Millennium Challenge Corporation and Georgia

    Millennium Challenge Compact Table of Contents
Article 1. Goal and Objectives
    Section 1.1 Compact Goal
    Section 1.2 Program Objective
    Section 1.3 Project Objectives
Article 2. Funding and Resources
    Section 2.1 Program Funding
    Section 2.2 Compact Implementation Funding
    Section 2.3 MCC Funding
    Section 2.4 Disbursement
    Section 2.5 Interest
    Section 2.6 Government Resources; Budget
    Section 2.7 Limitations of the Use of MCC Funding
    Section 2.8 Taxes
Article 3. Implementation
    Section 3.1 Program Implementation Agreement
    Section 3.2 Government Responsibilities
    Section 3.3 Policy Performance
    Section 3.4 Accuracy of Information
    Section 3.5 Implementation Letters
    Section 3.6 Procurement and Grants
    Section 3.7 Records; Accounting; Covered Providers; Access
    Section 3.8 Audits; Reviews
Article 4. Communications
    Section 4.1 Communications
    Section 4.2 Representatives
    Section 4.3 Signatures
Article 5. Termination; Suspension; Expiration
    Section 5.1 Termination; Suspension
    Section 5.2 Consequences of Termination, Suspension or 
Expiration
    Section 5.3 Refunds; Violation
    Section 5.4 Survival
Article 6. Compact Annexes; Amendments; Governing Law
    Section 6.1 Annexes
    Section 6.2 Amendments
    Section 6.3 Inconsistencies
    Section 6.4 Governing Law
    Section 6.5 Additional Instruments
    Section 6.6 References to MCC Web site
    Section 6.7 References to Laws, Regulations, Policies and 
Guidelines
    Section 6.8 MCC Status
Article 7. Entry Into Force
    Section 7.1 Domestic Requirements
    Section 7.2 Conditions Precedent to Entry into Force
    Section 7.3 Date of Entry into Force
    Section 7.4 Compact Term
    Section 7.5 Provisional Application
Annex I: Program Description
Annex II: Multi-Year Financial Plan Summary
Annex III: Description of Monitoring and Evaluation Plan
Annex IV: Conditions Precedent to Disbursement of Compact 
Implementation Funding
Annex V: Definitions
Annex VI: Tax Provisions

Millennium Challenge Compact Preamble

    This Millennium Challenge Compact (this ``Compact'') is between the 
United States of America, acting through the Millennium Challenge 
Corporation, a United States government corporation (``MCC''), and 
Georgia (``Georgia''), acting through its government (the 
``Government'') (individually a ``Party'' and collectively, the 
``Parties''). Capitalized terms used in this Compact will have the 
meanings provided in Annex V.
    Recalling that the Parties successfully concluded an initial 
Millennium Challenge Compact that advanced the progress of Georgia in 
achieving lasting economic growth and poverty reduction, demonstrated 
the strong partnership between the Parties, and was implemented in 
accordance with MCC's core policies and standards;
    Recognizing that the Parties are committed to the shared goals of 
promoting economic growth and the elimination of extreme poverty in 
Georgia and that MCC assistance under this Compact supports Georgia's 
demonstrated commitment to strengthening good governance, economic 
freedom and investments in people;
    Recalling that the Government consulted with the private sector and 
civil society of Georgia to determine the priorities for the use of MCC 
assistance and developed and submitted to MCC a proposal for such 
assistance to achieve lasting economic growth and poverty reduction; 
and
    Recognizing that MCC wishes to help Georgia implement the program 
described herein to achieve the goal and objectives described herein 
(as such program description and objectives may be amended from time to 
time in accordance with the terms hereof, the ``Program'');
    The Parties hereby agree as follows:

Article 1. Goal and Objectives

Section 1.1 Compact Goal

    The goal of this Compact is to reduce poverty through economic 
growth in Georgia (the ``Compact Goal''). MCC's assistance will be 
provided in a manner that strengthens good governance, economic 
freedom, and investments in the people of Georgia.

[[Page 48475]]

Section 1.2 Program Objective

    The objective of the Program (the ``Program Objective'') is to 
support strategic investments in general education, technical and 
vocational education and training and higher education that will 
strengthen the quality of education in Georgia, with an emphasis on 
science, technology, engineering, and math (``STEM'') education. The 
Program consists of the projects described in Annex I (each a 
``Project'' and collectively, the ``Projects'').

Section 1.3 Project Objectives.

    The objective of each of the Projects (each a ``Project Objective'' 
and collectively, the ``Project Objectives'') is to:
    (a) Improve general education quality in Georgia through: 
infrastructure enhancements to the physical learning environment in 
schools, training for educators and school managers, and support to 
classroom, national and international education assessments;
    (b) strengthen the linkage between market-demanded skills and the 
supply of Georgians with technical skills relevant to the local 
economy; and
    (c) support delivery of high-quality STEM degree programs in 
Georgia.

Article 2. Funding and Resources

Section 2.1 Program Funding

    Upon entry into force of this Compact in accordance with Section 
7.3, MCC will grant to the Government, under the terms of this Compact, 
an amount not to exceed One Hundred Thirty Six Million Six Hundred 
Fifty Thousand United States Dollars (US$136,650,000) (``Program 
Funding'') for use by the Government to implement the Program. The 
allocation of Program Funding is generally described in Annex II.

Section 2.2 Compact Implementation Funding

    (a) Upon signature of this Compact, MCC will grant to the 
Government, under the terms of this Compact and in addition to the 
Program Funding described in Section 2.1, an amount not to exceed Three 
Million Three Hundred Fifty Thousand United States Dollars 
(US$3,350,000) (``Compact Implementation Funding'') under Section 
609(g) of the Millennium Challenge Act of 2003, as amended (the ``MCA 
Act''), for use by the Government to facilitate implementation of the 
Compact, including for the following purposes:
    (i) Financial management and procurement activities (including 
costs related to agents procured by MCC to provide standby fiscal and 
procurement agent services, if required);
    (ii) administrative activities (including start-up costs such as 
staff salaries) and administrative support expenses such as rent, 
office equipment, computers and other information technology or capital 
equipment;
    (iii) monitoring and evaluation activities;
    (iv) feasibility, design and other project preparatory studies; and
    (v) other activities to facilitate Compact implementation as 
approved by MCC.
    The allocation of Compact Implementation Funding is generally 
described in Annex II.
    (b) In accordance with Section 7.5, this Section 2.2 and other 
provisions of this Compact applicable to Compact Implementation Funding 
will be effective, for purposes of Compact Implementation Funding only, 
as of the date this Compact is signed by MCC and the Government.
    (c) Each Disbursement of Compact Implementation Funding is subject 
to satisfaction of the conditions precedent to such disbursement as set 
forth in Annex IV.
    (d) If, after the first anniversary of this Compact entering into 
force, MCC determines that the full amount of Compact Implementation 
Funding available under Section 2.2(a) exceeds the amount that 
reasonably can be utilized for the purposes set forth in Section 
2.2(a), MCC, by written notice to the Government, may withdraw the 
excess amount, thereby reducing the amount of the Compact 
Implementation Funding available under Section 2.2(a) (such excess, the 
``Excess CIF Amount''). In such event, the amount of Compact 
Implementation Funding granted to the Government under Section 2.2(a) 
will be reduced by the Excess CIF Amount, and MCC will have no further 
obligations with respect to such Excess CIF Amount.
    (e) MCC, at its option by written notice to the Government, may 
elect to grant to the Government an amount equal to all or a portion of 
such Excess CIF Amount as an increase in the Program Funding, and such 
additional Program Funding will be subject to the terms and conditions 
of this Compact applicable to Program Funding.

Section 2.3 MCC Funding

    Program Funding and Compact Implementation Funding are collectively 
referred to in this Compact as ``MCC Funding,'' and includes any 
refunds or reimbursements of Program Funding or Compact Implementation 
Funding paid by the Government in accordance with this Compact.

Section 2.4 Disbursement

    In accordance with this Compact and the Program Implementation 
Agreement, MCC will disburse MCC Funding for expenditures incurred in 
furtherance of the Program (each instance, a ``Disbursement''). Subject 
to the satisfaction of all applicable conditions precedent, the 
proceeds of Disbursements will be made available to the Government, at 
MCC's sole election, by (a) deposit to one or more bank accounts 
established by the Government and acceptable to MCC (each, a 
``Permitted Account'') or (b) direct payment to the relevant provider 
of goods, works or services for the implementation of the Program. MCC 
Funding may be expended only for Program expenditures.

Section 2.5 Interest

    The Government will pay or transfer to MCC, in accordance with the 
Program Implementation Agreement, any interest or other earnings that 
accrue on MCC Funding prior to such funding being used for a Program 
purpose.

Section 2.6 Government Resources; Budget

    (a) In accordance with MCC's Guidelines for Country Contributions, 
the Government will make a contribution towards meeting the Program 
Objective and Project Objectives of this Compact. Annex II describes 
such contribution in more detail. In addition, the Government will take 
all actions that are necessary to carry out the Government's 
responsibilities under this Compact.
    (b) The Government will use its best efforts to ensure that all MCC 
Funding it receives or is projected to receive in each of its fiscal 
years is fully accounted for in its annual budget for the duration of 
the Program.
    (c) The Government will not reduce the normal and expected 
resources that it would otherwise receive or budget from sources other 
than MCC for the activities contemplated under this Compact and the 
Program.
    (d) Unless the Government discloses otherwise to MCC in writing, 
MCC Funding will be in addition to the resources that the Government 
would otherwise receive or budget for the activities contemplated under 
this Compact and the Program.

Section 2.7 Limitations on the Use of MCC Funding

    The Government will ensure that MCC Funding is not used for any

[[Page 48476]]

purpose that would violate United States law or policy, as specified in 
this Compact or as further notified to the Government in writing or by 
posting from time to time on the MCC Web site at www.mcc.gov (the ``MCC 
Web site''), including but not limited to the following purposes:
    (a) For assistance to, or training of, the military, police, 
militia, national guard or other quasi-military organization or unit;
    (b) for any activity that is likely to cause a substantial loss of 
United States jobs or a substantial displacement of United States 
production;
    (c) to undertake, fund or otherwise support any activity that is 
likely to cause a significant environmental, health, or safety hazard, 
as further described in MCC's Environmental Guidelines and any guidance 
documents issued in connection with the guidelines posted from time to 
time on the MCC Web site or otherwise made available to the Government 
(collectively, the ``MCC Environmental Guidelines''); or
    (d) to pay for the performance of abortions as a method of family 
planning or to motivate or coerce any person to practice abortions, to 
pay for the performance of involuntary sterilizations as a method of 
family planning or to coerce or provide any financial incentive to any 
person to undergo sterilizations or to pay for any biomedical research 
which relates, in whole or in part, to methods of, or the performance 
of, abortions or involuntary sterilization as a means of family 
planning.

Section 2.8 Taxes

    (a) Unless the Parties specifically agree otherwise in writing, the 
Government will ensure that all MCC Funding and GRDF Funding are free 
from the payment or imposition of any existing or future taxes, duties, 
levies, contributions or other similar charges (but not fees or charges 
for services that are generally applicable in Georgia, reasonable in 
amount and imposed on a non-discriminatory basis) (``Taxes'') of or in 
Georgia (including any such Taxes imposed by a national, regional, 
local or other governmental or taxing authority of or in Georgia). 
Specifically, and without limiting the generality of the foregoing, MCC 
Funding and GRDF Funding will be free from the payment of (i) any 
tariffs, customs duties, import taxes, export taxes, and other similar 
charges on any goods, works or services introduced into Georgia in 
connection with the Program or the activities of GRDF; (ii) sales tax, 
value added tax, excise tax, property transfer tax, and other similar 
charges on any transactions involving goods, works or services in 
connection with the Program or the activities of GRDF; (iii) taxes and 
other similar charges on ownership, possession or use of any property 
in connection with the Program or the activities of GRDF; and (iv) 
taxes and other similar charges on income, profits or gross receipts 
attributable to work performed in connection with the Program or the 
activities of GRDF and related social security taxes and other similar 
charges on all natural or legal persons performing work in connection 
with the Program or the activities of GRDF, except (x) natural persons 
who are residents of Georgia for taxation purposes (excluding non-
Georgian citizens) and (y) legal persons formed under the laws of 
Georgia or any subsidiaries or branches thereof (but excluding MCA-
Georgia and any other entity formed for the purpose of implementing the 
Government's obligations hereunder).
    (b) The mechanisms that the Government will use to implement the 
tax exemption required by Section 2.8(a) are set forth in Annex VI. 
Such mechanisms may include exemptions from the payment of Taxes that 
have been granted in accordance with applicable law, refund or 
reimbursement of Taxes by the Government to MCC, MCA-Georgia or to the 
taxpayer, or payment by the Government to MCA-Georgia or MCC, for the 
benefit of the Program, of an agreed amount representing any 
collectible Taxes on the items described in Section 2.8(a). To the 
extent that there are Taxes not addressed in Annex VI, whether 
currently in force or established in the future, that MCC determines, 
in its sole discretion, are not being exempted by the Government in 
accordance with this Section 2.8(b), the Government hereby agrees that 
it will implement appropriate procedures (approved in writing by MCC) 
to ensure that such additional Taxes are exempted in accordance with 
this Section 2.8. For the avoidance of doubt, the identification (or 
lack of identification) of Taxes in Annex VI, or the description (or 
lack of description) of procedures to implement the required exemption 
from such Taxes in Annex VI, will in no way limit the scope of the tax 
exemption required by Section 2.8.
    (c) If a Tax has been paid contrary to the requirements of Section 
2.8(a) or Annex VI, the Government will refund promptly to MCC (or to 
another party as designated by MCC) the amount of such Tax in United 
States dollars or the currency of Georgia within thirty (30) days (or 
such other period as may be agreed in writing by the Parties) after the 
Government is notified in writing (whether by MCC or MCA-Georgia) that 
such Tax has been paid.
    (d) No MCC Funding or GRDF Funding, proceeds thereof or Program 
Assets may be applied by the Government in satisfaction of its 
obligations under Section 2.8(c).
    (e) MCA-Georgia will withhold all applicable Taxes on behalf of the 
staff of MCA-Georgia (excluding non-Georgian citizens).

Article 3. Implementation

Section 3.1 Program Implementation Agreement

    The Parties will enter into an agreement providing further detail 
on the implementation arrangements, fiscal accountability and 
disbursement and use of MCC Funding, among other matters (the ``Program 
Implementation Agreement'' or ``PIA''); and the Government will 
implement the Program in accordance with this Compact, the PIA, any 
other Supplemental Agreement and any Implementation Letter.

Section 3.2 Government Responsibilities

    (a) The Government has principal responsibility for overseeing and 
managing the implementation of the Program.
    (b) The Government hereby designates Millennium Challenge Account 
Georgia, a legal entity of public law under Georgian law, as the 
accountable entity to implement the Program and to exercise and perform 
the Government's right and obligation to oversee, manage and implement 
the Program, including without limitation, managing the implementation 
of Projects and their Activities, allocating resources and managing 
procurements. Such entity will be referred to herein as ``MCA-
Georgia,'' and has the authority to bind the Government with regard to 
all Program activities. The Government hereby also designates MCA-
Georgia to exercise and perform the Government's rights and 
responsibilities to oversee, manage and implement the activities 
defined in the Grant and Implementation Agreement, dated as of July 13, 
2012. The designation by this Section 3.2(b) will not relieve the 
Government of any obligations or responsibilities hereunder or under 
any related agreement, for which the Government remains fully 
responsible. MCC hereby acknowledges and consents to the designation in 
this Section 3.2(b).
    (c) The Government will ensure that any Program Assets or services 
funded

[[Page 48477]]

in whole or in part (directly or indirectly) by MCC Funding or GRDF 
Funding are used solely in furtherance of this Compact and the Program 
unless MCC agrees otherwise in writing.
    (d) The Government will take all necessary or appropriate steps to 
achieve the Program Objective and the Project Objectives during the 
Compact Term (including, without limiting Section 2.6(a), funding all 
costs that exceed MCC Funding and are required to carry out the terms 
hereof and achieve such objectives, unless MCC agrees otherwise in 
writing).
    (e) The Government will ensure that the Program is implemented and 
that the Government carries out its obligations hereunder with due 
care, efficiency and diligence in conformity with sound technical, 
financial, and management practices, and in conformity with this 
Compact, the Program Implementation Agreement, each other Supplemental 
Agreement and the Program Guidelines.
    (f) The Government grants to MCC a perpetual, irrevocable, royalty-
free, worldwide, fully paid, assignable right and license to practice 
or have practiced on its behalf (including the right to produce, 
reproduce, publish, repurpose, use, store, modify, or make available) 
any portion or portions of Intellectual Property as MCC sees fit in any 
medium, now known or hereafter developed, for any purpose whatsoever.

Section 3.3 Policy Performance

    In addition to undertaking the specific policy, legal and 
regulatory reform commitments identified in Annex I (if any), the 
Government will seek to maintain and to improve its level of 
performance under the policy criteria identified in Section 607 of the 
MCA Act, and the selection criteria and methodology used by MCC.

Section 3.4 Accuracy of Information

    The Government assures MCC that, as of the date this Compact is 
signed by the Government, the information provided to MCC by or on 
behalf of the Government in the course of reaching agreement with MCC 
on this Compact is true, correct and complete in all material respects.

Section 3.5 Implementation Letters

    From time to time, MCC may provide guidance to the Government in 
writing on any matters relating to this Compact, MCC Funding or 
implementation of the Program (each, an ``Implementation Letter''). The 
Government will use such guidance in implementing the Program. The 
Parties may also issue jointly agreed-upon Implementation Letters to 
confirm and record their mutual understanding on aspects related to the 
implementation of this Compact, the PIA or other related agreements.

Section 3.6 Procurement and Grants

    (a) The Government will ensure that the procurement of all goods, 
works and services by the Government or any Provider to implement the 
Program will be in accordance with the MCC Program Procurement 
Guidelines posted from time to time on the MCC Web site (the ``MCC 
Program Procurement Guidelines''). The MCC Program Procurement 
Guidelines include the following requirements, among others:
    (i) Open, fair, and competitive procedures must be used in a 
transparent manner to solicit, award and administer contracts and to 
procure goods, works and services;
    (ii) solicitations for goods, works, and services must be based 
upon a clear and accurate description of the goods, works and services 
to be acquired;
    (iii) contracts must be awarded only to qualified contractors that 
have the capability and willingness to perform the contracts in 
accordance with their terms on a cost effective and timely basis; and
    (iv) no more than a commercially reasonable price, as determined, 
for example, by a comparison of price quotations and market prices, 
will be paid to procure goods, works and services.
    (b) Unless MCC otherwise consents in writing, the Government will 
ensure that any grant issued in furtherance of the Program (each, a 
``Grant'') is awarded, implemented and managed pursuant to open, fair 
and competitive procedures administered in a transparent manner 
acceptable to MCC. In furtherance of this requirement, and prior to the 
issuance of any Grant, the Government and MCC will agree upon written 
procedures to govern the identification of potential Grant recipients, 
including, without limitation, appropriate eligibility and selection 
criteria and award procedures. Such agreed procedures will be posted on 
the MCA-Georgia Web site.

Section 3.7 Records; Accounting; Covered Providers; Access

    (a) Government Books and Records. The Government will maintain, and 
will use its best efforts to ensure that all Covered Providers maintain 
accounting books, records, documents and other evidence relating to the 
Program adequate to show, to MCC's satisfaction, the use of all MCC 
Funding and the implementation and results of the Program (``Compact 
Records''). In addition, the Government will furnish or cause to be 
furnished to MCC, upon its request, originals or copies of such Compact 
Records.
    (b) Accounting. The Government will maintain and will use its best 
efforts to ensure that all Covered Providers maintain Compact Records 
in accordance with generally accepted accounting principles prevailing 
in the United States, or at the Government's option and with MCC's 
prior written approval, other accounting principles, such as those (i) 
prescribed by the International Accounting Standards Board, or (ii) 
then prevailing in Georgia. Compact Records must be maintained for at 
least five (5) years after the end of the Compact Term or for such 
longer period, if any, required to resolve any litigation, claims or 
audit findings or any applicable legal requirements.
    (c) Providers and Covered Providers. Unless the Parties agree 
otherwise in writing, a ``Provider'' is (i) any entity of the 
Government that receives or uses MCC Funding or any other Program Asset 
in carrying out activities in furtherance of this Compact or (ii) any 
third party that receives at least US$50,000 in the aggregate of MCC 
Funding (other than as salary or compensation as an employee of an 
entity of the Government) during the Compact Term. A ``Covered 
Provider'' is (i) a non-United States Provider that receives (other 
than pursuant to a direct contract or agreement with MCC) US$300,000 or 
more of MCC Funding in any Government fiscal year or any other non-
United States person or entity that receives, directly or indirectly, 
US$300,000 or more of MCC Funding from any Provider in such fiscal 
year, or (ii) any United States Provider that receives (other than 
pursuant to a direct contract or agreement with MCC) US$500,000 or more 
of MCC Funding in any Government fiscal year or any other United States 
person or entity that receives, directly or indirectly, US$500,000 or 
more of MCC Funding from any Provider in such fiscal year.
    (d) Access. Upon MCC's request, the Government, at all reasonable 
times, will permit, or cause to be permitted, authorized 
representatives of MCC, an authorized Inspector General of MCC 
(``Inspector General''), the United States Government Accountability 
Office, any auditor responsible for an audit contemplated herein or 
otherwise conducted in furtherance of this Compact, and any agents or 
representatives engaged by MCC or the Government to conduct any 
assessment, review or evaluation of the Program, the opportunity to 
audit, review, evaluate or inspect facilities, assets and activities

[[Page 48478]]

funded in whole or in part by MCC Funding.

Section 3.8 Audits; Reviews

    (a) Government Audits. Except as the Parties may agree otherwise in 
writing, the Government will, on an annual basis (or on a more frequent 
basis if requested by MCC in writing), conduct, or cause to be 
conducted, financial audits of all disbursements of MCC Funding 
covering the period from signing of this Compact until the following 
December 31 and covering each twelve-month period thereafter ending 
December 31, through the end of the Compact Term. In addition, upon 
MCC's request, the Government will ensure that such audits are 
conducted by an independent auditor approved by MCC and named on the 
list of local auditors approved by the Inspector General or a United 
States-based certified public accounting firm selected in accordance 
with the Guidelines for Financial Audits Contracted by the Millennium 
Challenge Corporation's Accountable Entities (the ``Audit Guidelines'') 
issued and revised from time to time by the Inspector General, which 
are posted on the MCC Web site. Audits will be performed in accordance 
with the Audit Guidelines and be subject to quality assurance oversight 
by the Inspector General. Each audit must be completed and the audit 
report delivered to MCC no later than 90 days after the applicable 
audit period, or such other period as the Parties may otherwise agree 
in writing.
    (b) Audits of Other Entities. The Government will ensure that MCC 
financed agreements between the Government or any Provider, on the one 
hand, and (i) a United States nonprofit organization, on the other 
hand, state that the United States nonprofit organization is subject to 
the applicable audit requirements contained in OMB Circular A-133, 
Audits of States, Local Governments, and Non-Profit Organizations, 
issued by the United States Office of Management and Budget; (ii) a 
United States for-profit Covered Provider, on the other hand, state 
that the United States for-profit organization is subject to audit by 
the applicable United States Government agency, unless the Government 
and MCC agree otherwise in writing; and (iii) a non-US Covered 
Provider, on the other hand, state that the non-US Covered Provider is 
subject to audit in accordance with the Audit Guidelines.
    (c) Corrective Actions. The Government will use its best efforts to 
ensure that each Covered Provider (i) takes, where necessary, 
appropriate and timely corrective actions in response to audits; (ii) 
considers whether the results of the Covered Provider's audit 
necessitates adjustment of the Government's records; and (iii) permits 
independent auditors to have access to its records and financial 
statements as necessary.
    (d) Audit by MCC. MCC will have the right to arrange for audits of 
the Government's use of MCC Funding.
    (e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used 
to fund the costs of any audits, reviews or evaluations required under 
this Compact.

Article 4. Communications

Section 4.1 Communications

    Any document or communication required or submitted by either Party 
to the other under this Compact will be in writing and, except as 
otherwise agreed with MCC, in English. All such documents or 
communication must be submitted to the address of each Party set forth 
below or to such other address as may be designated by any Party in a 
written notice to the other Party.

To MCC:

    Millennium Challenge Corporation, Attention: Vice President, 
Compact Operations, (with a copy to the Vice President and General 
Counsel), 875 Fifteenth Street NW., Washington, DC 20005, United States 
of America, Telephone: (202) 521-3600, Facsimile: (202) 521-3700, 
Email: [email protected] (Vice President, Compact Operations), 
[email protected] (Vice President and General Counsel).

To the Government:

    Ministry of Finance, Attention: Minister of Finance, (with a copy 
to the Department of Public Debt and External Financing), 16, Vakhtang 
Gorgasali Street, Tbilisi 0114, Georgia, Telephone: +995 32 2261 444; 
+995 32 2261 461, Facsimile: +995 32 2261 088; +995 32 2261 461.

To MCA-Georgia:

    MCA-Georgia, Attention: Chief Executive Officer, (with a copy to 
the General Counsel) 4, Sanapiro Street, Tbilisi 0105, Georgia, 
Telephone: +995 32 2281 185; +995 32 2281 174.

Section 4.2 Representatives

    For all purposes of this Compact, the Government will be 
represented by the individual holding the position of, or acting as, 
Minister of Finance of Georgia, and MCC will be represented by the 
individual holding the position of, or acting as, Vice President, 
Compact Operations (each of the foregoing, a ``Principal 
Representative''). Each Party, by written notice to the other Party, 
may designate one or more additional representatives (each, an 
``Additional Representative'') for all purposes of this Compact except 
as specified in Section 6.2. The Government hereby designates the Chief 
Executive Officer of MCA-Georgia as an Additional Representative. MCC 
hereby designates the Deputy Vice President, Department of Compact 
Operations, EAPLA, as an Additional Representative. A Party may change 
its Principal Representative to a new representative that holds a 
position of equal or higher authority upon written notice to the other 
Party.

Section 4.3 Signatures

    Signatures to this Compact and to any amendment to this Compact 
will be original signatures appearing on the same page or in an 
exchange of letters or diplomatic notes. With respect to all documents 
arising out of this Compact (other than the Program Implementation 
Agreement and any other legally binding international agreement) and 
amendments thereto, signatures may be delivered by facsimile or 
electronic mail and in counterparts and will be binding on the Party 
delivering such signature to the same extent as an original signature 
would be.

Article 5. Termination; Suspension; Expiration

Section 5.1 Termination; Suspension

    (a) Either Party may terminate this Compact without cause in its 
entirety by giving the other Party thirty (30) days' prior written 
notice. MCC may also terminate this Compact or MCC Funding without 
cause in part by giving the Government thirty (30) days' prior written 
notice.
    (b) MCC may, immediately, upon written notice to the Government, 
suspend or terminate this Compact or MCC Funding, in whole or in part, 
and any obligation related thereto, if MCC determines that any 
circumstance identified by MCC, as a basis for suspension or 
termination (as notified in writing to the Government) has occurred, 
which circumstances include but are not limited to the following:
    (i) The Government fails to comply with its obligations under this 
Compact or any other agreement or arrangement entered into by the 
Government in connection with this Compact or the Program;
    (ii) an event or series of events has occurred that makes it 
probable that the Program Objective or any of the Project Objectives 
will not be achieved during the Compact Term or that the Government 
will not be able to perform its obligations under this Compact;

[[Page 48479]]

    (iii) a use of MCC Funding or continued implementation of this 
Compact or the Program violates applicable law or United States 
Government policy, whether now or hereafter in effect;
    (iv) the Government or any other person or entity receiving MCC 
Funding or using Program Assets is engaged in activities that are 
contrary to the national security interests of the United States;
    (v) an act has been committed or an omission or an event has 
occurred that would render Georgia ineligible to receive United States 
economic assistance under Part I of the Foreign Assistance Act of 1961, 
as amended (22 U.S.C. 2151 et seq.), by reason of the application of 
any provision of such act or any other provision of law;
    (vi) the Government has engaged in a pattern of actions 
inconsistent with the criteria used to determine the eligibility of 
Georgia for assistance under the MCA Act; and
    (vii) the Government or another person or entity receiving MCC 
Funding or using Program Assets is found to have been convicted of a 
narcotics offense or to have been engaged in drug trafficking.

Section 5.2 Consequences of Termination, Suspension or Expiration

    (a) Upon the suspension or termination, in whole or in part, of 
this Compact or any MCC Funding, or upon the expiration of this 
Compact, the provisions of Section 4.2 of the Program Implementation 
Agreement will govern the post-suspension, post-termination or post-
expiration treatment of MCC Funding, any related Disbursements and 
Program Assets. Any portion of this Compact, MCC Funding, the Program 
Implementation Agreement or any other Supplemental Agreement that is 
not suspended or terminated will remain in full force and effect.
    (b) MCC may reinstate any suspended or terminated MCC Funding under 
this Compact if MCC determines that the Government or other relevant 
person or entity has committed to correct each condition for which MCC 
Funding was suspended or terminated.

Section 5.3 Refunds; Violation

    (a) If any MCC Funding, any interest or earnings thereon, or any 
Program Asset is used for any purpose in violation of the terms of this 
Compact, then MCC may require the Government to repay to MCC in United 
States Dollars the value of the misused MCC Funding, interest, 
earnings, or asset, plus interest within thirty (30) days after the 
Government's receipt of MCC's request for repayment. Interest will 
accrue from the date of the violation and will be calculated at the 10-
year U.S. Treasury Note rate prevailing as of the close of business in 
Washington, DC as of the date of MCC's request for payment. The 
Government will not use MCC Funding, proceeds thereof or Program Assets 
to make such payment.
    (b) Notwithstanding any other provision in this Compact or any 
other agreement to the contrary, MCC's right under Section 5.3(a) to 
obtain a refund will continue during the Compact Term and for a period 
of (i) five (5) years thereafter, or (ii) one (1) year after MCC 
receives actual knowledge of such violation, whichever is later.

Section 5.4 Survival

    The Government's responsibilities under this Section and Sections 
2.7, 3.2(f), 3.7, 3.8, 5.2, 5.3, and 6.4 will survive the expiration, 
suspension or termination of this Compact.

Article 6. Compact Annexes; Amendments; Governing Law

Section 6.1 Annexes

    Each annex to this Compact constitutes an integral part hereof, and 
references to ``Annex'' mean an annex to this Compact unless otherwise 
expressly stated.

Section 6.2 Amendments

    (a) The Parties may amend this Compact by written agreement. Such 
agreement will specify how it enters into force. The Additional 
Representatives will not represent the Parties for such purposes.
    (b) Notwithstanding Section 6.2(a), the Parties may modify Annexes 
I-V, by written agreement signed by the Parties which will enter into 
force upon signature, to (i) suspend, terminate or modify any Project 
or Activity, or to create a new project; (ii) change the allocations of 
funds as set forth in Annex II as of the date hereof (including to 
allocate funds to a new project); (iii) modify the implementation 
framework described in Annex I; or (iv) add, delete or waive any 
condition precedent described in Annex IV; provided that, in each case, 
any such modification (1) is consistent in all material respects with 
the Program Objective and Project Objectives; (2) does not cause the 
amount of Program Funding to exceed the aggregate amount specified in 
Section 2.1 (as may be modified by operation of Section 2.2(e)); (3) 
does not cause the amount of Compact Implementation Funding to exceed 
the aggregate amount specified in Section 2.2(a); (4) does not reduce 
the Government's responsibilities or contribution of resources required 
under Section 2.6; and (5) does not extend the Compact Term.

Section 6.3 Inconsistencies

    In the event of any conflict or inconsistency between:
    (a) any Annex and any of Articles 1 through 7, such Articles 1 
through 7, as applicable, will prevail; or
    (b) this Compact and any other agreement between the Parties 
regarding the Program, this Compact will prevail.

Section 6.4 Governing Law

    This Compact is an international agreement and as such will be 
governed by the principles of international law.

Section 6.5 Additional Instruments

    Any reference to activities, obligations or rights undertaken or 
existing under or in furtherance of this Compact or similar language 
will include activities, obligations and rights undertaken by, or 
existing under or in furtherance of any agreement, document or 
instrument related to this Compact and the Program.

Section 6.6 References to MCC Web site

    Any reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a document or 
information available on, or notified by posting on the MCC Web site 
will be deemed a reference to such document or information as updated 
or substituted on the MCC Web site from time to time.

Section 6.7 References to Laws, Regulations, Policies and Guidelines

    Each reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a law, regulation, 
policy, guideline or similar document will be construed as a reference 
to such law, regulation, policy, guideline or similar document as it 
may, from time to time, be amended, revised, replaced, or extended and 
will include any law, regulation, policy, guideline or similar document 
issued under or otherwise applicable or related to such law, 
regulation, policy, guideline or similar document.

Section 6.8 MCC Status

    MCC is a United States government corporation acting on behalf of 
the United States Government in the implementation of this Compact. MCC 
and the United States Government assume no liability for any claims or 
loss arising out of activities or omissions under this Compact. The 
Government

[[Page 48480]]

waives any and all claims against MCC or the United States Government 
or any current or former officer or employee of MCC or the United 
States Government for all loss, damage, injury, or death arising out of 
activities or omissions under this Compact, and agrees that it will not 
bring any claim or legal proceeding of any kind against any of the 
above entities or persons for any such loss, damage, injury, or death. 
The Government agrees that MCC and the United States Government or any 
current or former officer or employee of MCC or the United States 
Government will be immune from the jurisdiction of all courts of 
Georgia for any claim or loss arising out of activities or omissions 
under this Compact.

Article 7. Entry Into Force

Section 7.1 Domestic Requirements

    Before this Compact enters into force, the Government will proceed 
in a timely manner to complete any domestic procedures necessary for 
entry into force of this Agreement.

Section 7.2 Conditions Precedent to Entry Into Force

    Before this Compact enters into force:
    (a) The Program Implementation Agreement must have been signed by 
the parties thereto;
    (b) The Government must have delivered to MCC:
    (i) A letter signed and dated by the Principal Representative of 
the Government, or such other duly authorized representative of the 
Government acceptable to MCC, confirming that the Government has 
completed its domestic requirements necessary for this Compact to enter 
into force and that the other conditions precedent to entry into force 
in this Section 7.2 have been met;
    (ii) a signed legal opinion from the Ministry of Justice of Georgia 
(or such other legal representative of the Government acceptable to 
MCC), in form and substance satisfactory to MCC; and
    (iii) complete, certified copies of all decrees, legislation, 
regulations or other governmental documents relating to the 
Government's domestic requirements necessary for this Compact to enter 
into force and the satisfaction of Section 7.1, which MCC may post on 
its Web site or otherwise make publicly available.
    (c) The Government must have developed an implementation plan to 
build capacity in Georgian public universities to offer international 
standard STEM degrees and/or Accreditation Board for Engineering and 
Technology (``ABET'') accreditation for the STEM Higher Education 
Project in form and substance acceptable to MCC; and
    (d) MCC shall not have determined that after signature of this 
Compact, the Government has engaged in a pattern of actions 
inconsistent with the eligibility criteria for MCC Funding.

Section 7.3 Date of Entry Into Force

    This Compact will enter into force on the date of the letter from 
MCC to the Government in an exchange of letters confirming that MCC has 
completed its domestic requirements for entry into force of this 
Compact and that the conditions precedent to entry into force in 
Section 7.2 have been met.

Section 7.4 Compact Term

    This Compact will remain in force for five (5) years after its 
entry into force, unless terminated earlier under Section 5.1 (the 
``Compact Term'').

Section 7.5 Provisional Application

    Upon signature of this Compact, and until this Compact has entered 
into force in accordance with Section 7.3, the Parties will 
provisionally apply the terms of this Compact; provided that, no MCC 
Funding, other than Compact Implementation Funding, will be made 
available or disbursed before this Compact enters into force.
    In Witness Whereof, the undersigned, having been duly authorized, 
have signed this Compact.
    Done at Tbilisi, Georgia, this 26th day of July, 2013, in the 
English language only.
    For the United States of America, acting through the Millennium 
Challenge Corporation, Name: Daniel W. Yohannes, Title: Chief Executive 
Officer.
    For Georgia, acting through its Government, Name: Maia Panjikidze, 
Title: Minister of Foreign Affairs.

Annex I Program Description

    This Annex I describes the Program that MCC Funding will support in 
Georgia during the Compact Term.

A. Program Overview

1. Background and Consultative Process
(a) Background
    This is the second MCC compact with Georgia, following a US$395 
million compact, which entered into force in April 2006 and was 
completed in April 2011, and focused on certain infrastructure 
improvements (roads, water networks and energy rehabilitation) and 
rural private enterprise development through a grant program and an 
investment fund (the ``First Compact'').
    The First Compact supplemented efforts by the Government to promote 
stability, good government and private enterprise development in the 
years following the 2004 Rose Revolution. The infrastructure 
development goals of the First Compact remain key facets of a broader 
Georgian strategy to reduce poverty in the country. Likewise, many of 
the investments made by the investment fund, the Georgia Regional 
Development Fund, survive and thereby continue to provide critical 
capital to small and medium enterprises. Among the lessons learned from 
the First Compact were the effectiveness of MCA-Georgia as an MCA 
Entity and a model for core operations such as procurement, finance, 
and government and public relations that offers significant advantages 
in terms of transparency and independence. The productive nature of 
MCC's partnership with the Government during the First Compact set the 
stage for the development of the second Compact. Georgia was selected 
eligible for this second Compact in December 2012 after an iterative 
three-year process, throughout which MCC encouraged the Government to 
continue working to refine its proposals.
    Despite the advances achieved by the First Compact, the Government 
conducted an analysis of constraints to economic growth in spring 2011 
and identified the low quality of human capital as a significant 
constraint to economic growth. The lack of human capital is 
particularly acute in the STEM fields. The Compact aims to reduce this 
human capital constraint to economic growth.
(b) Consultative Process
    Throughout the development of the second Compact, the Government 
engaged in an inclusive consultative process, conducting consultations 
across Georgia and in the United States. Together with MCC in the 
course of compact development, the Government has utilized several 
formal mechanisms to solicit direct input to inform project selection 
and design from relevant stakeholders at different steps in the 
process.
    The Government's analysis of constraints to economic growth was 
published in spring 2011 in draft form and open for public comment. At 
that stage formal consultations were held with non-governmental 
organizations and think tanks to solicit feedback. The Economic Policy 
Research Center, a Georgia-based non-governmental organization, 
provided written comments that helped shaped the project selection 
process, leading to

[[Page 48481]]

further investigation and exploration of projects across the education 
sector that could address the binding constraint of human capital. 
Other key consultations that took place during the early stages of 
compact development include three sets of consultative meetings with 
over 50 different international higher education institutions in 
Georgia and the U.S. to help define the STEM Higher Education Project.
    The Georgian private sector was also consulted extensively, with 
Government and/or MCC officials meeting with more than 70 private 
sector representatives throughout compact development, primarily to 
discuss the areas where gaps in the supply of qualified potential 
employees/Georgian university graduates and the demands of the labor 
market were perceived. Private sector demand for skilled, educated 
technicians was gauged more formally through a wage survey of Georgian 
AmCham members conducted by a Georgia-based research institution, which 
contributed directly to the economic analysis.
    Public consultations have and are expected to continue well into 
the design and implementation phase. As part of the Industry-led Skills 
and Workforce Development Project, an open invitation to interested 
parties in several Georgian cities resulted in several outreach 
sessions in December 2012, that were widely attended by a diverse group 
of private industry representatives, non-governmental organizations, 
and education institutions. Following a ``Call for Ideas,'' the 
Government received over 130 proposals for outlining priorities and 
proposed investments to improve professional training. These have been 
assessed by a panel to further define the MCC investment proposal.
2. Description of Program and Beneficiaries
(a) Description
    The Program consists of three Projects: (i) The Improving General 
Education Quality Project; (ii) the Industry-led Skills and Workforce 
Development Project; and (iii) the STEM Higher Education Project. These 
projects respond to constraints to economic growth by aiming to improve 
the poor quality of human capital in Georgia.
    Each Project is generally described in Part B of this Annex I. Part 
B also identifies one or more of the Activities that will be undertaken 
in furtherance of each Project as well as the various sub-activities 
within each Activity.
(b) Beneficiaries
    Each Project of the Compact is intended to further poverty 
reduction through economic growth. Specific beneficiaries are 
identified in greater detail in the Project descriptions in Part B of 
this Annex I. A brief summary of the beneficiaries of each Project is 
as follows:
    (i) The beneficiaries of the Improving General Education Quality 
Project in the first year of implementation are estimated to be 
approximately 186,400 students. Students entering these schools each 
year will add to the total number of beneficiaries with approximately 
870,000 student beneficiaries projected over a 20 year project 
lifetime. Including family members over twenty years and adjusting for 
possible double counting, total beneficiaries are estimated at 1.6 
million.
    (ii) The number of beneficiaries of the Industry-led Skills and 
Workforce Development Project is estimated to be 26,000. Beneficiaries 
will likely be from poorer households, the population that has 
traditionally taken advantage of technical vocational training. This 
Project is also expected to strengthen sector policy, to facilitate the 
creation of new programs, and to promote the uptake of best practice 
throughout the sector.
    (iii) The number of student beneficiaries from the STEM Higher 
Education Project over twenty years is estimated at 8,500. Including 
family members, total beneficiaries are estimated at 31,000.
3. Environmental and Social Safeguards
    All of the Projects will be implemented in compliance with the MCC 
Environmental Guidelines, the International Finance Corporation 
Performance Standards on Environmental and Social Sustainability, and 
the MCC Gender Policy, and in a manner acceptable to MCC. The 
Government also will ensure that the Projects comply with all national 
environmental laws and regulations, licenses and permits, except to the 
extent such compliance would be inconsistent with this Compact. 
Specifically, the Government will: (a) Develop, adopt, and implement an 
Environment and Social Management System for MCA-Georgia and other 
Government agencies, as necessary, for all Compact activities, which 
will be in form and substance satisfactory to MCC; (b) cooperate with 
or complete, as the case may be, any ongoing environmental and social 
impact assessments, or if necessary undertake and complete any 
additional environmental and social assessments, environmental and 
social management plans, environmental and social audits, resettlement 
policy frameworks, and resettlement action plans, each in form and 
substance satisfactory to MCC; (c) ensure that Project-specific 
environmental and social management plans are developed and all 
relevant measures contained in such plans are integrated into project 
design, and the applicable procurement documents and associated 
finalized contracts, in each case, in form and substance satisfactory 
to MCC; and (d) implement to MCC's satisfaction appropriate 
environmental and social mitigation measures identified in such 
assessments or plans or developed to address environmental and social 
issues identified during compact implementation. Unless MCC agrees 
otherwise in writing, the Government will fund all necessary costs of 
environmental and social mitigation measures (including, without 
limitation, costs of resettlement) not specifically provided for, or 
that exceed the MCC Funding specifically allocated for such costs in, 
the Detailed Financial Plan for any Project.
    To maximize the positive social impacts of the Projects, address 
cross-cutting social and gender issues such as human trafficking, child 
and forced labor, and HIV/AIDS, and ensure compliance with the MCC 
Gender Policy the Government will: (x) Develop a comprehensive social 
and gender integration plan which, at a minimum, incorporates the 
findings of a comprehensive social and gender analysis, identifies 
approaches for regular, meaningful and inclusive consultations with 
women and other vulnerable/underrepresented groups, consolidates the 
findings and recommendations of Project-specific social and gender 
analyses and sets forth strategies for incorporating findings of the 
social and gender analyses into final Project designs as appropriate 
(``Social and Gender Integration Plan''); and (y) ensure, through 
monitoring and coordination during implementation, that final Activity 
designs, construction tender documents, other bidding documents and 
implementation plans are consistent with and incorporate the outcomes 
of the social and gender analyses and Social and Gender Integration 
Plan.

B. Description of Projects

    Set forth below is a description of each of the Projects that the 
Government will implement, or cause to be implemented, using MCC 
Funding to

[[Page 48482]]

advance the applicable Project Objective. In addition, specific 
activities that will be undertaken within each Project (each, an 
``Activity''), including sub-activities, are also described.
1. Improving General Education Quality Project
(a) Summary of Project and Activities
    The Improving General Education Quality Project consists of three 
Activities that target areas where the Georgian education sector needs 
the most support: Physical environment, secondary school teacher 
subject knowledge and pedagogical skills, school management capacity, 
and education assessments.
    To increase the impact and sustainability of the Improving General 
Education Quality Project, MCA-Georgia will work to develop 
partnerships with the private sector to promote private investment in 
and around the Project. Areas for partnership include but are not 
limited to teacher and school leader professional development, 
curriculum and learning platforms, and other innovations in STEM, ICT, 
and English-language education.
(i) Improved Learning Environment Infrastructure Activity
    The Improved Learning Environment Infrastructure Activity will 
rehabilitate approximately 130 existing Georgian public school 
facilities. Many Georgian public schools were built in the Soviet era 
and have been largely neglected due to the absence of any significant 
maintenance program. This has resulted in the school facilities being 
in a very poor physical condition including internal utilities such as 
heating, electrical, water supply and sanitation systems. The 
Government formed the Educational and Scientific Infrastructure 
Development Agency (``ESIDA'') within the Ministry of Education and 
Science of Georgia (``MoES'') to address issues related to school 
maintenance, rehabilitation and building of new school facilities.
    The Improved Learning Environment Infrastructure Activity will 
involve the full internal and external rehabilitation of selected 
school facilities, utility upgrades, and provision of laboratories. 
Such an approach addresses the key elements correlating with improved 
educational performance, including human comfort, indoor air quality, 
and adequate lighting.
    Using a transparent school selection process, the Government and 
MCC identified well-utilized schools in poor physical condition that 
served a high share of Socially Vulnerable students; these schools will 
be targeted for rehabilitation under this Activity over the course of 
the Compact Term. This selection of schools was based on a formula that 
prioritizes schools according to their physical condition (dilapidated 
physical infrastructure), social vulnerability (higher proportion of 
Socially Vulnerable students), number of students enrolled and 
utilization rate.
    MCA-Georgia and ESIDA will develop and enter into an Implementing 
Entity Agreement (in form and substance satisfactory to MCC) that will 
establish the duties and obligations associated with implementation. 
For the first phase of work, MCA-Georgia will manage the financial 
resources for this Activity.
    The establishment of an Operations and Maintenance (``O&M'') 
program in the Georgian school system is critical for ensuring the 
sustainability of MCC's investment and more broadly to the viability of 
Georgian schools. The Government has committed to developing and 
funding a strategy to address school O&M and a plan for its 
implementation (collectively, a ``School O&M Plan'') with MCC support. 
Key elements of this School O&M Plan include hiring permanent dedicated 
and technically qualified staff to develop and implement the School O&M 
Plan.
    Establishing an MCC incentive fund. MCC will support this effort 
via an incentive fund of up to US$2,500,000 (Two Million, Five Hundred 
Thousand United States Dollars) to support school O&M activities. This 
funding will be contingent upon Government implementation of the School 
O&M Plan in a manner satisfactory to MCC. On an annual basis, MCC will 
evaluate ESIDA's performance against the School O&M Plan and will build 
on satisfactory performance by contributing MCC funding to O&M 
activities in the following year.
(ii) Training Educators for Excellence Activity
    The objectives of the Training Educators for Excellence Activity 
are to: (1) Improve math, science, information and communication 
technology (``ICT''), and English teaching and learning in Grades 7-12; 
and (2) improve school management. This Activity will achieve the first 
objective by training approximately 23,400 math, science, ICT, and 
English teachers and improving upon the existing system of continuous 
professional development. To improve school-based professional 
development, the Activity will train up to one school-based 
professional development coordinator per public school, or 
approximately 2,000 such coordinators. Training these coordinators will 
provide new teacher orientation and continued school-based professional 
development to support the adoption of new knowledge and good teaching 
practices. To meet the second objective, this Activity will support the 
development of a continuous professional development framework for 
school principals and will provide training for up to 2,000 public 
school principals in Georgia.
    The Implementing Entity for the Training Educators for Excellence 
Activity will be the Teacher Professional Development Center 
(``TPDC''), the MoES entity currently responsible for managing teacher 
professional development. Compact funding will support capacity 
building for TPDC, the development and provision of training materials 
and equipment, and the implementation of training courses. This 
Activity will also support the provision of appropriate teaching/
learning technology and equipment for both schools and TPDC.
(iii) Education Assessment Support Activity
    A rigorous testing and assessment system is needed to track student 
progress as well as to hold teachers, administrators, and national 
authorities accountable to Georgian stakeholders for achieving 
outcomes. National testing systems will be supplemented by 
participating in international benchmarking assessments such as the 
OECD's ``Program for International Student Assessment'' and Institute 
of Education Science's ``Trends in International Math and Science 
Study'' not only to verify national results but also to track the 
country's performance relative to the international community. 
Furthermore, international assessments can help Georgia monitor system-
level achievement trends in a global context over time and to further 
improve teaching and learning through research and analysis of 
assessment data.
    The National Assessment and Examination Center (``NAEC'') will be 
the Implementing Entity and a direct beneficiary of this Activity. This 
investment will support NAEC to carry out (1) national; (2) 
international; and (3) classroom assessments of student learning, with 
a focus on using the results for improving the quality of general 
education. The investment will support the effective implementation of 
approximately six national assessments, including secondary school 
mathematics and selected sciences. This Activity will fund preparation 
for and participation in five international assessments aimed at 
measuring student

[[Page 48483]]

and teacher performance in secondary school math, science, and ICT. 
Finally, NAEC will create a classroom assessment system for secondary 
school math and science teachers that will enable those teachers to 
assess their students' learning and use the results to improve teaching 
and learning in their classrooms. This system will build upon current 
USAID work in classroom assessment tools for primary school teachers 
described in paragraph (f) below.
    The Government will submit for MCC review and approval a plan to 
address the recurrent, operational costs associated with MCC 
investments in the Training Educators for Excellence Activity and the 
Education Assessment Support.
(b) Beneficiaries
    In general, beneficiaries of the Improving General Education 
Quality Project will be Georgian public school students in grades 7-12, 
who will benefit from both student assessments and teacher professional 
development. A smaller subset of students in grades 1-12 will also 
benefit from improvements to the physical infrastructure of their 
schools. Estimates for the number of beneficiaries will be established 
in more depth after detailed design. Identification of beneficiaries 
for each Activity is set forth below.
(i) Improved Learning Environment Infrastructure Activity
    Assuming that approximately 130 schools are rehabilitated, with an 
average enrollment of 350 students per school, the initial 
beneficiaries of this Activity will be approximately 45,500 students. 
New students entering these schools each year will add to the total 
number of beneficiaries over a twenty year project lifetime. Most 
rehabilitated schools will have twelve grades; hence the average intake 
of new students each year is approximately 29 students per school, and 
will be approximately 3,800 students across 130 schools. Over a twenty 
year project lifetime this will add approximately 72,000 additional 
students for a total of 117,500 student beneficiaries. The Improved 
Learning Environment Infrastructure Activity has targeted poverty-
reducing outcomes by balancing questions of economic efficiency, social 
equity, and stakeholder engagement. Half the beneficiaries will be 
girls and over 25 percent will be students from Socially Vulnerable 
families, and ethnic minorities.
(ii) Training Educators for Excellence Activity
    The beneficiaries of this Activity will be students whose teachers 
take part in professional development. It is envisioned that public 
secondary school math, science, ICT and English teachers will receive 
training, benefitting students in grades 7-12 over the twenty-year 
expected lifetime of the Activity. In 2012, total enrollment in grades 
7-9 was 134,900 and in grades 10-12, 113,600 students. Assuming an 
implementation success rate of 75 percent, 101,200 lower-secondary and 
85,200 upper-secondary students (a total of 186,400 secondary students) 
will initially benefit from this program. With an annual intake into 
secondary grade 7 of approximately 48,000 students, and a 75 percent 
implementation rate, roughly 36,000 new student beneficiaries will 
enter secondary school each year. Over a twenty-year project lifetime, 
this will add an additional 684,000 student beneficiaries, for a total 
of 870,400 student beneficiaries. Including family members and 
adjusting for possible double counting, total beneficiaries are 
estimated at 1.6 million individuals over twenty years.
(iii) Education Assessment Support Activity
    Beneficiaries will be the NAEC staff receiving capacity building 
and training. All teachers and students in Georgia may benefit from 
improved classroom assessments and improved policy due to the systemic 
feedback generated from national and international assessments. Key 
stakeholders within the Government will benefit from having information 
that allows them to make better-informed policy decisions.
(c) Environmental and Social Mitigation Measures
    According to MCC Environmental Guidelines, the Improving General 
Education Quality Project is considered a ``Category B'' project. An 
Environmental and Social Assessment will be undertaken and an 
Environmental and Social Management Framework developed to address: the 
overall environmental and social issues associated with the school 
rehabilitation program; identify, screen and assess key risks; and 
propose appropriate measures to manage such risks and impacts. A 
Hazardous Waste Management Plan and an Occupational Health and Safety 
Plan will be required as part of the MCC-funded consultancy for 
feasibility and design. Effective measures for improving efficiency in 
the consumption of energy, water, and other resources and material 
inputs will be identified and incorporated into the design for 
rehabilitation.
    No resettlement is anticipated in this Project since there is no 
requirement for new land or building additions at the existing schools.
(d) Corporate Social Responsibility
    MCA-Georgia will develop a corporate, community, and social 
responsibility program that enables schools, community organizations 
and businesses to form partnerships to create enhanced environments for 
learning. This program will operate on principles of volunteerism, 
sponsorship and mentorship with the goal of increased support for 
education and improved classroom and school environments within the 
partner schools and the communities where they are located.
(e) Donor Coordination
    The World Bank, USAID, German Society for International Cooperation 
(``GIZ''), United Nations Development Programme, and the European Union 
have recently funded activities including school construction and 
supporting the Government in refining general education financing. MCC 
and Government consultations with other donors involved in the 
education sector are expected to continue through the Compact term, 
ensuring that investments in the sector continue to be strategic and 
focused on the ultimate goal of increasing future incomes for 
Georgians. Beyond general coordination, the Education Assessment 
Support Activity is expected to build on the World Bank's national 
assessment support to the NAEC as well as the USAID primary school 
classroom assessment project.
(f) USAID
    USAID recently performed a school rehabilitation project in Georgia 
and has provided valuable data and lessons learned from this work. In 
addition, USAID's Georgia Primary Education Project (``G-PriEd'') is 
supporting a variety of activities in the education sector including 
classroom diagnostic assessments in grades 1-6. G-PriEd provided a tool 
for Georgian teachers to assess students' knowledge and skills in 
critical competency areas of reading and mathematics. It will be used 
by teachers in the classroom to ensure that children are on track to 
meet standards. While the Georgian national standards in reading and 
mathematics include a framework for formative assessment, there is no 
systematic assessment approach for diagnosing students'

[[Page 48484]]

performance in core reading and math competencies. G-PriEd's diagnostic 
assessment approach will be used to target skills in critical 
competency areas of reading and mathematics in the Georgian national 
curriculum and thus have a direct relation with curricula and 
instruction in Georgian schools. Teachers will be trained to carry out 
classroom diagnostics and will be able to use the tool for feedback to 
adjust ongoing teaching and learning in order to improve students' 
achievement of intended instructional outcomes. MCC plans to 
incorporate this approach and the lessons learned as part of its 
support for classroom assessments in grades 7-12. Building on USAID's 
work described above, MCC will strengthen NAEC to design and facilitate 
effective strategies for classroom-based assessments and develop 
materials, including sample tasks and tests that can be used by 
teachers to improve their own assessment practices.
(g) Sustainability
    Use of the Implementing Entities (ESIDA, TPDC, and NAEC), an 
approach replicating that employed with success in the First Compact, 
will help to develop long-term organizational capacity in Georgia. 
Building organic capabilities is an important objective in order to 
increase the probability of the Project's sustainability.
    The School O&M Plan to be developed by ESIDA will promote long-term 
maintenance for rehabilitated schools in order to maximize the useful 
life of investments.
(i) Improved Learning Environment Infrastructure Activity
    The development and implementation of a comprehensive School O&M 
Plan, maintenance standards, institutional arrangement and budgetary 
process is a critical element of this Activity. The proposed School O&M 
Plan will be performed in close coordination with ESIDA to ensure human 
resources, program activities, implementation mechanisms and budgetary 
processes are well integrated and sustainable. ESIDA will hire 
sufficient technical staff dedicated to the Compact activities as well 
as provide the necessary office facilities to conduct the design 
activities.
(ii) Training Educators for Excellence Activity
    This Activity will improve TPDC's capacity to engage in a broad 
range of teacher and principal continuing professional development. In 
the future, TPDC will be able to use experience gained during the 
Compact term to expand this model to all teachers. Increased Government 
funding dedicated to professional development will promote the long-
term sustainability of professional development.
(iii) Education Assessment Support Activity
    Over the course of the Compact, the staff of the NAEC will have 
executed a number of national and international assessments, gaining 
experience in planning and implementing ongoing assessments. This will 
help ensure that national and international assessments contribute to 
continued improvement of the general education system, particularly in 
support of ongoing curriculum revision and reform. A system for 
classroom assessments will have been created and NAEC will have built 
initial experience in running this system. Increased Government funding 
dedicated to assessments will promote the long-term sustainability of 
NAEC activities.
(h) Policy, Legal and Regulatory Reforms
    MCC and the Government have focused on two areas in planning for 
policy reform relevant to the Compact: Operations and maintenance of 
infrastructure investments and international assessments.
(i) Improved Learning Environment Infrastructure Activity
    With respect to future operations and maintenance of school 
infrastructure rehabilitated under this Project, the Government 
(specifically, ESIDA, and the Georgian Ministry of Finance) has agreed 
to develop and fund the School O&M Plan for the entire public school 
system, during and after the Compact term. This funding will be 
complemented by Compact-funded technical assistance to create and 
implement for the School O&M Plan and a matching O&M incentive fund 
through the Compact term. MCC and the Government will work together to 
transform O&M management practices to increase the sustainability of 
infrastructure investments.
(ii) Education Assessment Support Activity
    High quality national and international assessments provide 
valuable information for monitoring learning achievement, such as the 
gaps between boys and girls or between urban and rural students. 
Support to NAEC will enable it to analyze educational outcomes, 
including gender and social differences in achievement, and to provide 
the MoES useful information for policymaking.
2. Industry-led Skills and Workforce Development Project
(a) Summary of Project and Activities
    The Industry-led Skills and Workforce Development Project aims to 
improve the linkage between market-demanded skills and the supply of 
Georgians with technical skills relevant to the local economy. 
Investments to support Technical Vocational Education and Training 
(``TVET'') are necessary to address industry demand for skilled 
technicians and to reach potential beneficiaries who may not have the 
opportunity to obtain further education and training. The two 
activities proposed under this Project are therefore designed to (1) 
solicit innovative proposals from Georgian TVET providers for the 
establishment of new or the expansion of existing training programs to 
meet industry needs; and (2) to strengthen the Georgian TVET sector's 
national policy and provider practice with respect to industry 
engagement.
(i) Competitive Program Improvement Grants Activity
    The objective of this Activity will be to provide an initial 
investment in programs that develop and expand innovative and effective 
approaches to employment-oriented skills development in Georgia through 
a competitive grants program. Given the complexities and dynamics of 
the Georgian labor market, a competitive grants program aims to 
incentivize TVET providers to engage local industry and will provide 
the necessary funding and technical assistance to overcome financial 
and capacity barriers to market entry, particularly in the more costly 
and complex STEM fields and agriculture.
    The Competitive Program Improvement Grants Activity will award 
grants to develop new or expand existing TVET programs. This may 
include support to the following types of activities: curriculum 
development, new program piloting, instructor training, internship and 
job placement programs, teaching and learning materials, equipment 
modernization, and limited facilities rehabilitation. In addition to 
this development capital, technical assistance will be provided to 
promote quality proposals, build capacity, and ensure compliance with 
MCC policies. To receive grants, TVET providers and their industry 
partners will be required to show commitment through cash or in-kind 
contributions.

[[Page 48485]]

MCA-Georgia will work to ensure industry engagement through outreach 
and support for linking industry and providers.
(ii) Strengthening Sector Policy and Provider Practice Activity
    In addition to direct support to TVET programs, there is a need to 
strengthen sector policy and provider practice with respect to industry 
engagement. At the national level, this Activity will provide technical 
assistance to the Government to strengthen sector policy to support 
industry engagement. At the provider level, existing good practices in 
industry engagement such as tracer studies and industry advisory boards 
will be identified and promoted across the sector to foster linkages 
and responsiveness to labor market needs.
    Sector Strengthening: Building on the Government's recent reforms, 
a number of areas have been identified at the sector policy level where 
specific technical assistance to improve industry engagement and 
education quality may provide substantial systemic returns. The 
Government will ensure that targeted sector interventions build on past 
and on-going technical assistance provided by other donors.
    Provider Practice: The Strengthening Sector Policy and Provider 
Practice Activity will identify and promote existing but isolated 
internationally accepted good practice within the sector. This will be 
achieved by supporting industry recognition awards, and strengthening, 
documenting, and disseminating these practices to other providers. 
Conferences in Georgia will be hosted to showcase and promote good 
practice. Technical assistance will be offered to providers interested 
in adopting good practice at their institutions.
    Practices supported by the Strengthening Sector Policy and Provider 
Practice Activity will be linked to sector strengthening technical 
assistance. These linkages will provide a local context for industry 
engagement and local examples of how to enhance engagement in the 
Georgian TVET sector. Thus, national technical assistance will not be 
provided in isolation but together with developing provider practice.
(b) Beneficiaries
    Estimates for the number of beneficiaries will be established in 
more depth after detailed design, though currently the number is 
approximately 26,000. Generally, beneficiaries will likely be from 
economically disadvantaged households, because that is the population 
that has traditionally taken advantage of technical vocational 
training.
    Both TVET program improvements and wider usage of TVET best 
practice will benefit staff, teachers, and students of supported 
programs. The most direct impact will be to students who are able to 
obtain well-paid employment following their training. Industry will 
benefit from having a supply of trained labor to meet market demand. 
The target beneficiaries for the sector strengthening technical 
assistance will be the staff of the national policy entities and 
indirectly all provider staff, teachers, and students involved in the 
sector.
(c) Environmental and Social Mitigation Measures
    According to MCC Environmental Guidelines, the Industry-led Skills 
and Workforce Development Project is considered a ``Category D'' 
project. MCA-Georgia and the grants manager will be required to develop 
and implement the Competitive Program Improvement Grants Activity in 
accordance with operational procedures that address environmental and 
social performance issues, including the screening and assessment of 
key environmental and social impacts, the development of appropriate 
mitigation measures for proposed investments, the monitoring of the 
adequacy of implementation of mitigation measures, and periodic 
reporting of environmental and social performance to MCA-Georgia. While 
the Project does not anticipate major TVET infrastructure 
rehabilitation, proposed investments will be assessed in broad terms to 
ensure that technical and environmental supporting infrastructure, such 
as sufficient structural capacity and adequate electrical, gas, water 
supply and sanitation facilities, is in place for the investments. 
Resettlement is not anticipated as part of this Project.
    Given the importance of increasing employment in high demand 
technical areas, integration of gender and social equity objectives in 
technical and vocational education is a critical part of ensuring 
successful overall project outcomes. Substantial gender differences in 
STEM program participation, and in employment and remuneration, also 
point to the importance of TVET career counseling. Gender and social 
issues will be addressed through technical assistance and resources for 
implementing (i) national policies, and (ii) high priority TVET 
qualification providing programs. Social and gender integration will be 
a critical component of grant evaluation and of technical assistance to 
grant recipients. Guidelines for the competitive grants program will 
require that proposed program providers specify their strategies and 
approaches for ensuring that women and members of disadvantaged groups 
are equitably represented in these priority programs, drawing from the 
results of an MCC study on barriers to participation for women and 
vulnerable groups.
(d) Donor Coordination
    There are a number of local and international donors active in the 
TVET sector. In the planning processes for this Compact MCC and MCA-
Georgia have met regularly with donors, including UNDP, the World Bank, 
GIZ, the European Union, and other donors to ensure coordination of 
planning and leverage of existing donor activity in the design of 
activities. One example is the proposal for work in the Strengthening 
Sector Policy and Provider Practice Activity to build an industry 
engagement component to enhance the TVET strategy document completed by 
another donor. Engagement with other donors will be on-going.
(e) Sustainability
    By creating stronger linkages between labor supply and demand at 
the national and provider-levels, investing in a knowledge system to 
identify and promote best practice, and rewarding industry-led program 
design, the Industry-led Skills and Workforce Development Project will 
promote sustainability of the programs financed through the Compact, as 
well as future programs in Georgia. Additionally, programs receiving 
grants must have a sustainability plan to ensure that Compact 
investments will result in programs that continue beyond the period of 
grant financing.
3. STEM Higher Education Project
(a) Summary of Project
    Georgia has industrial, infrastructure, information technology, and 
transport related economic growth that requires well-educated graduates 
from STEM degree programs. While access to higher education is 
widespread, institutions in Georgia with STEM programs are not 
historically well-equipped to provide the skilled graduates needed by 
industry. In particular, there are two factors impeding the 
establishment of quality STEM programs in Georgia: (1) Outdated 
knowledge and approach of faculty educated largely under the Soviet 
system; and (2) the substantial cost in facilities and equipment 
necessary to establish a modern STEM program.
    In order to achieve the delivery of high-quality STEM degree 
programs to

[[Page 48486]]

boost productivity and growth and increase employment opportunities, 
the STEM Higher Education Project plans to attract international 
university partner(s) to support the Government's effort to modernize 
STEM education. The objectives of this Project will be to build 
capacity in Georgian public universities and to offer international 
standard STEM degrees and/or Accreditation Board for Engineering and 
Technology (``ABET'') accreditation. International university 
partner(s) will also bring the needed experience to promote equitable 
participation for women and minorities in STEM programs.
(i) International Partner Selection
    MCA-Georgia launched an open and competitive RFP to identify 
international universities interested in partnering with Georgian 
universities to offer STEM degrees. The RFP solicited proposals from 
international universities, alone or in consortia, that could offer 
international university STEM bachelor degree(s) in partnership with 
Georgian public universities. A technical evaluation panel selected 
three proposals from U.S. universities that will undertake detailed 
program development analyses and tasks that will be completed using 
Compact Implementation Funding, including development of a full 
technical implementation plan.
(ii) ABET Accreditation
    MCC may also support STEM programs at Georgian public universities 
in obtaining accreditation from ABET in conjunction with or as an 
alternative to international university STEM bachelor degree(s) to 
achieve quality STEM education outcomes. ABET is the U.S. association 
that accredits university programs in applied science, computing, 
engineering, and engineering technology. ABET accreditation for 
Georgian institutions may require facility and equipment upgrades, 
curriculum development, professional development for professors, and 
institutional support.
(iii) Georgia Regional Development Fund
    The Georgia Regional Development Fund is an independently managed 
investment fund created under the First Compact to provide capital to 
Georgian small and medium enterprises in the agribusiness and tourism 
sectors. Concurrently with the First Compact's expiration, GRDF began a 
five year wind-down period that will conclude on April 7, 2016, and as 
part of the conclusion of the First Compact the ownership interest in 
GRDF was transferred to the Service Agency of the Ministry of Finance 
of Georgia. Prior to its complete wind-down, GRDF may make 
distributions to the holder of the ownership interest, and at the 
conclusion of the wind-down will liquidate all of its assets and make a 
final distribution of the liquidation proceeds to the holder of the 
ownership interest. The Parties have agreed that proceeds from GRDF 
will be used to support the activities of the STEM Higher Education 
Project.
    To facilitate GRDF's support of the STEM Higher Education Project, 
the Parties anticipate that its ownership interest will be transferred 
to MCA-Georgia and that MCA-Georgia will assume responsibility for 
managing the proceeds of GRDF distributions, provided that the Service 
Agency of the Ministry of Finance will remain responsible for any 
liabilities associated with the ownership interest that arose prior to 
the date of transfer. The management of GRDF is responsible for 
collection of proceeds. The ownership interest transfer, along with 
modifications to existing GRDF operational documents will be made 
pursuant to one or more agreements that must be in form and substance 
satisfactory to the Parties. In addition, MCC and the Government must 
agree to the specific uses of the GRDF proceeds in the Project before 
any expenditure of such proceeds. The Parties anticipate signing a 
Supplemental Agreement that will specify the terms of MCC and the 
Government's agreement on the use of GRDF proceeds, and that MCA-
Georgia will develop operational guidelines for its management of the 
funds (including requirements for internal controls, auditing and 
reporting), all of which must be satisfactory in form and substance to 
MCC (collectively, the ``New GRDF Operational Documents''). In the 
event that MCA-Georgia receives a distribution from GRDF before the New 
GRDF Operational Documents have been finalized, MCA-Georgia will hold 
such proceeds in a segregated bank account at a financial institution 
acceptable to MCC. If any of the GRDF proceeds remain at the end of the 
Compact Term, they will be allocated to such uses as MCC and the 
Government may agree as part of the compact closure process.
(b) Beneficiaries
    Beneficiaries are the students who will obtain a high-quality 
undergraduate degree in STEM disciplines. This will provide them with 
improved employment opportunities, higher salaries, and improved long-
term prospects for professional growth in a STEM sector. The Project 
will focus on recruiting women as well as Socially Vulnerable students. 
Taking the average cohort size provided by the three selected 
respondents, an estimated 8,500 students would pass through the higher 
education program over twenty years. Including family members of the 
students, total beneficiaries are estimated at approximately 31,000 
individuals. Estimates for the number of beneficiaries will be 
established in more depth after the program design phase.
(c) Environmental and Social Mitigation Measures
(i) Environmental and Social Performance
    According to MCC Environmental Guidelines, this Activity is 
considered to be a ``Category B'' project, as minor environmental 
impacts may occur. Appropriate environmental and social assessment and 
mitigation measures and proper due diligence will be implemented in 
accordance with MCC Environmental Guidelines in order to ensure that 
these programs are well designed and will not result in adverse 
environmental health and safety impacts. Proposed investments should be 
assessed in broad terms to ensure that technical and environmental 
supporting infrastructure is in place for the investments, such as 
sufficient structural capacity and adequate electrical, gas, water 
supply and sanitation facilities. Based on the assessments, 
participating universities and Government agencies, as necessary, will 
develop and implement an environmental and social operations manual to 
ensure use of best practices regarding waste management, emergency 
preparedness, and occupational health and safety.
(ii) Access
    A major challenge in higher education is women's self-selection 
into non-STEM concentrations (e.g., women were 27 percent of enrollees 
in engineering in 2009) and the low share of language minority and 
Socially Vulnerable students pursuing higher education. Disadvantaged 
students, who often cannot afford higher education and/or lack the 
level of general education needed to access it, may not benefit from 
this Project. This risk will be partially mitigated through the 
proposed Improving General Education Quality Project, designed to 
enable access to higher education for traditionally disadvantaged 
students.
    MCA-Georgia also will help the international university partner to

[[Page 48487]]

develop private sector support for scholarships and endowments to help 
disadvantaged students. The Government has also expressed a commitment 
to providing scholarships to students. One criterion for selecting the 
three qualified international universities was their demonstrated 
experience in recruiting and retaining female and Socially Vulnerable 
students into STEM programs. In addition, the Project will address 
gender and social imbalances in supported STEM programs by (1) 
implementing activities based on the findings and recommendations of 
studies that identify barriers to female and Socially Vulnerable 
students' participation in STEM programs; (2) ensuring that higher 
education programs supported by the Compact include specific activities 
for outreach, mentoring, and career counseling programs directed toward 
women, minorities, and disadvantaged student populations; and (3) 
needs-based scholarships. Ethnic minority students accepted into the 
program will have a year to study Georgian before starting classes, in 
line with the current Government policy.
(d) Sustainability
    The universities and their Georgian partners will be required to 
present clear and feasible business plans for how the programs will be 
maintained after the Compact funding period. Program proposals must 
demonstrate the long-term viability of programs at sustainable 
operating cost levels. The capacity building of Georgian public 
universities will improve their ability to provide high-quality STEM 
education in the future or to achieve and maintain ABET accreditation. 
To promote sustainability, the Government has committed to provide 
funding for universities over twenty years, tied to student enrollment, 
in line with Government policy. Moreover, as noted above, the 
Government has agreed that proceeds from GRDF will be allocated to 
support the long term sustainability of the STEM Higher Education 
Project.
    To further increase the impact and sustainability of the STEM 
Higher Education Project, MCA-Georgia will work to develop private 
sector engagement and partnerships between the selected consortium and 
businesses. Examples of these partnerships may include arrangements in 
which companies advise the university partner on needed professional 
skills, contribute equipment and knowledge that the university needs to 
develop these skills, sponsor students and faculty with scholarships 
and endowments, and hire interns and graduating students.
    Additionally, university partners have a strong interest in 
training professionals and helping them find jobs. The universities may 
carry out tracer studies to better understand job uptake and adjust 
programs accordingly. MCA-Georgia will also help university partner(s) 
to develop ties with businesses to assess market demand and place 
students in jobs.
(e) Policy, Legal and Regulatory Reforms
(i) University Accreditation Policy
    Tertiary institutions obtain authorization and accreditation to 
deliver programs of study and issue diplomas and certificates 
recognized by Government and industry. Authorization decisions are made 
by the National Centre for Education Quality Enhancement (``NCEQE'') 
Council on Authorization of Education Institutions. Accreditation is an 
external evaluation process conducted by the NCEQE Educational Program 
Accreditation Council, which determines the compliance of an 
educational program with established standards. Only accredited 
programs are eligible to receive Government funding. MCC will work with 
NCEQE to strengthen capacity to carry out authorization and 
accreditation of higher education institutions.

C. Implementation Framework

1. Accountable Entity

(a) Structure and Establishment
    The Government established an accountable entity, MCA-Georgia, as a 
legal entity of public law under the laws of Georgia. MCA-Georgia will 
act as the Government's permitted designee under the Compact. MCA-
Georgia is not under the control of any state controlling body and it 
will have operational and legal independence, including, inter alia, 
the ability to (i) enter into contracts in its own name; (ii) sue and 
be sued; (iii) establish a bank account in its own name; (iv) expend 
MCC Funding; and (v) engage contractors, consultants and/or grantees, 
including, without limitation, a procurement and fiscal agent.
    MCA-Georgia's internal operations are governed by a charter, which 
was required as part of the governmental decree establishing MCA-
Georgia and by bylaws, which provide further detail on the internal 
operations of MCA-Georgia.
    MCA-Georgia is administered, managed, and supported by the 
following bodies: (x) A supervisory board (the ``Supervisory Board''); 
(y) a management team (the ``Management Team''); and (z) one or more 
Stakeholders Committees (as defined below).
(b) Supervisory Board
    The Supervisory Board will have ultimate responsibility for the 
oversight, direction, and decisions of MCA-Georgia, as well as the 
overall implementation of the Compact. It is comprised of seven voting 
members, plus two non-voting members. The Supervisory Board includes 
the following representatives/offices:
    (i) Prime Minister (Chairman of the Supervisory Board);
    (ii) Minister of Finance of Georgia;
    (iii) Minister of Education and Science of Georgia;
    (iv) Minister of Justice of Georgia;
    (v) Minister of Foreign Affairs of Georgia;
    (vi) Private sector representative; and
    (vii) Civil (non-government) society representative.
    In addition, an MCC representative and MCA-Georgia's Chief 
Executive Officer (CEO) serve as non-voting members of the Supervisory 
Board. The private sector and civil society representatives will be 
chosen by a transparent selection process approved by MCC.
(c) Management Team
    The Management Team reports to the Supervisory Board and has 
principal responsibility for the day-to-day operations management of 
the Compact, including contracting, program management, financial 
management, reporting, and monitoring and evaluation. The Management 
Team is led by a CEO and as of the date of Compact signature is 
composed of the following directors and officers:
    (i) Chief Executive Officer;
    (ii) Chief Financial Officer;
    (iii) Improving General Education Quality Project Director;
    (iv) Tertiary Education Project Director;
    (v) Chief Infrastructure Engineer;
    (vi) Procurement Director;
    (vii) Environmental and Social Performance Director;
    (viii) General Counsel;
    (ix) Monitoring and Evaluation Director;
    (x) Gender and Social Assessment Director; and
    (xi) Business, Government and Public Relations Director.
(d) Stakeholders' Committee(s)
    MCA-Georgia will be assisted by one or more stakeholders' 
committees, the composition of which is currently under discussion with 
the Government (the ``Stakeholders' Committee''). The

[[Page 48488]]

Stakeholders' Committee(s) will be responsible for continuing the 
consultative process throughout implementation of the Compact. While 
the Stakeholders' Committee(s) will not have any decision-making 
authority, the Stakeholders' Committee(s) will be responsible for 
reviewing, at the request of the Board or the management unit, certain 
reports, agreements, and documents related to the implementation of the 
Compact in order to provide advice and input to MCA-Georgia regarding 
the implementation of the Program. The Stakeholders' Committee(s) may 
be composed of, inter alia, program beneficiaries, regional and local 
government representatives, entities with an interest or involvement in 
the implementation of the Compact, key NGOs, and any applicable civil 
society and private sector representatives.
2. Implementing Entities
    Subject to the terms and conditions of this Compact, the Program 
Implementation Agreement and any other related agreement entered into 
in connection with this Compact, as noted above the Government intends 
to engage several entities of the Government to implement and carry out 
specified Activities (or a component thereof) under this Compact (each, 
an ``Implementing Entity''). The appointment of any Implementing Entity 
will be subject to review and approval by MCC. The Government will 
ensure that the roles and responsibilities of each Implementing Entity 
and other appropriate terms are set forth in an agreement, in form and 
substance satisfactory to MCC (each an ``Implementing Entity 
Agreement'').
3. Fiscal Agent
    Unless MCC agrees otherwise in writing, the Government will engage 
a fiscal agent (a ``Fiscal Agent'') which will be responsible for 
assisting the Government with its fiscal management and assuring 
appropriate fiscal accountability of MCC Funding, and whose duties will 
include those set forth in the Program Implementation Agreement and 
such agreement as the Government enters into with the Fiscal Agent, 
which agreement will be in form and substance satisfactory to MCC.
4. Procurement Agent
    Based upon an assessment of local capacity and previous experience 
from the First Compact, an internal MCA-Georgia procurement unit will 
manage Compact procurements. A procurement director who has the 
requisite skills and experience to manage the procurement processes 
planned for this Compact (the ``Procurement Director'') has been hired 
by MCA-Georgia. In addition, a budget for procurement support 
consulting services is included for the first two years of the Compact 
to assist with the greater workload during this period. The Procurement 
Director will assure that MCA-Georgia adheres to the procurement 
standards set forth in the MCC Program Procurement Guidelines and 
ensure procurements are consistent with the procurement plan adopted by 
the Government pursuant to the Program Implementation Agreement, unless 
MCC agrees otherwise in writing. MCC may require that the Government 
engage an independent Procurement Agent during the Compact Term.

Annex II Multi-Year Financial Plan Summary

    This Annex II summarizes the Multi-Year Financial Plan for the 
Program.

1. General

    A multi-year financial plan summary (``Multi-Year Financial Plan 
Summary'') is attached hereto as Exhibit A to this Annex II. By such 
time as specified in the Program Implementation Agreement, the 
Government will adopt, subject to MCC approval, a multi-year financial 
plan that includes, in addition to the multi-year summary of estimated 
MCC Funding and the Government's contribution of funds and resources, 
the annual and quarterly funding requirements for the Program 
(including administrative costs) and for each Project, projected both 
on a commitment and cash requirement basis.

2. Government Contribution

    During the Compact Term, the Government will make contributions, 
relative to its national budget and taking into account prevailing 
economic conditions, as are necessary to carry out the Government's 
responsibilities under Section 2.6(a) of this Compact. These 
contributions may include in-kind and financial contributions 
(including obligations of Georgia on any debt incurred toward meeting 
these contribution obligations). To meet this obligation the Government 
has developed a budget over the Compact Term to allocate resources to 
each of the Projects including financial support for (a) implementing 
entity costs related to the management of the School O&M Plan; (b) the 
development of higher education STEM degrees; (c) capital equipment for 
MCC rehabilitated schools; (d) teacher training and assessments; (e) 
rehabilitation of public TVET facilities; (f) computers for educator 
professional development, as well as in-kind contributions of real 
property to be used for Program purposes; and (g) forgone taxes related 
to GRDF proceeds. The Government anticipates making contributions of 
approximately US$21,000,000 (or 15 percent of the amount of MCC Funding 
provided under this Compact) over the Compact Term. Such contribution 
will be in addition to the Government's spending allocated toward such 
activities in its budget for the year immediately preceding the 
establishment of this Compact. The Government's contribution will be 
subject to any legal requirements in Georgia for the budgeting and 
appropriation of such contribution, including approval of the 
Government's annual budget by its legislature. The Parties may set 
forth in the Program Implementation Agreement or other appropriate 
Supplemental Agreements certain requirements regarding this Government 
contribution, which requirements may be conditions precedent to the 
Disbursement of MCC Funding. During implementation of the Program, the 
Government's contributions may be changed or new contributions added 
with MCC approval; provided that, the modified or new contributions 
continue to advance the Project Objectives.

                                                      Exhibit A--Multi-Year Financial Plan Summary
                                                                          [US$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Component                            CIF         Year 1        Year 2        Year 3        Year 4        Year 5          Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Improving General Education Quality Project:
    (A) Improved Learning Environment Infrastructure  ............     5,400,000    16,200,000    16,200,000    16,200,000  ............      54,000,000
     Activity.......................................
        (i) Operations and Maintenance Sub-activity.  ............  ............  ............       500,000     1,000,000     1,000,000       2,500,000
    (B) Training Educators for Excellence Activity..  ............     1,100,000     3,150,000     4,250,000     4,250,000     1,250,000      14,000,000

[[Page 48489]]

 
    (C) Education Assessment Support Activity.......       350,000       750,000     1,000,000     1,450,000     1,950,000       500,000       6,000,000
                                                     ---------------------------------------------------------------------------------------------------
            Subtotal................................       350,000     7,250,000    20,350,000    22,400,000    23,400,000     2,750,000      76,500,000
2. STEM Higher Education Project:...................     1,000,000     4,000,000     7,500,000     9,000,000     6,000,000     2,500,000      30,000,000
                                                     ---------------------------------------------------------------------------------------------------
            Subtotal................................     1,000,000     4,000,000     7,500,000     9,000,000     6,000,000     2,500,000      30,000,000
3. Industry-led Skills and Workforce Development
 Project:
    (A) Competitive Program Improvement Grants             200,000     1,000,000     1,750,000     3,800,000     3,600,000     1,650,000      12,000,000
     Activity.......................................
    (B) Strengthening Sector Policy and Provider      ............       500,000       900,000     1,200,000       900,000       500,000       4,000,000
     Practice Activity..............................
                                                     ---------------------------------------------------------------------------------------------------
            Subtotal................................       200,000     1,500,000     2,650,000     5,000,000     4,500,000     2,150,000      16,000,000
4. Monitoring and Evaluation:
    Monitoring and Evaluation Activity..............       350,000       370,000       985,000       385,000       685,000       725,000       3,500,000
                                                     ---------------------------------------------------------------------------------------------------
            Subtotal................................       350,000       370,000       985,000       385,000       685,000       725,000       3,500,000
5. Program Management and Oversight:
    (A) MCA-Georgia.................................       680,000     1,520,571     1,520,571     1,520,571     1,520,571     2,107,716       8,870,000
    (B) Fiscal Agent................................       650,000       669,500       689,585       710,273       731,581       629,061       4,080,000
    (C) Procurement Oversight.......................       120,000       225,000       105,000        35,000        35,000        30,000         550,000
    (D) Audit.......................................  ............       100,000       100,000       100,000       100,000       100,000         500,000
                                                     ---------------------------------------------------------------------------------------------------
            Subtotal................................     1,450,000     2,515,071     2,415,156     2,365,844     2,387,152     2,866,777      14,000,000
                                                     ---------------------------------------------------------------------------------------------------
                Total Compact Budget................     3,350,000    15,635,071    33,900,156    39,150,844    36,972,152    10,991,777     140,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

Annex III Description of Monitoring and Evaluation Plan

    This Annex III generally describes the components of the Compact 
monitoring and evaluation plan (``M&E Plan''). The actual structure and 
content of the M&E Plan will be agreed to by MCC and the Government in 
accordance with MCC's Policy for Monitoring and Evaluation of Compacts 
and Threshold Programs (the ``MCC M&E Policy'') and may be modified as 
described in the MCC M&E Policy with MCC approval without requiring an 
amendment to this Annex III. The M&E Plan will be posted publicly on 
the MCC Web site and updated as necessary.

1. Overview

    MCC and the Government will formulate and agree to, and the 
Government will implement or cause to be implemented, an M&E Plan that 
specifies: (a) How progress toward the Compact Goal and Project 
Objectives will be monitored (``Monitoring Component''); (b) a process 
and timeline for the monitoring of planned, ongoing, or completed 
Activities to determine their efficiency and effectiveness; and (c) a 
methodology for assessment and rigorous evaluation of the outcomes and 
impact of the Program (``Evaluation Component''). The Monitoring 
Component and Evaluation Component are complementary activities that 
together provide a comprehensive plan for tracking progress and 
impacts. Information regarding the Program's performance, including the 
M&E Plan, and any amendments or modifications thereto, as well as 
progress and other reports, will be made publicly available on the Web 
site of MCC, MCA-Georgia and elsewhere.

2. Program Logic

    The M&E Plan will be built on a logic model that illustrates how 
the Projects and Activities contribute to the Compact Goal and the 
Project Objectives. A description of the logic underlying the proposed 
Compact Projects is included below, and a visualization of the logic 
model is included in Figure III.1 and III.2. This logic model is 
subject to change and will be updated and revised in the M&E Plan.
    (a) The objective of the Improving General Education Quality 
Project is to improve student learning outcomes, which is expected to 
lead to further education, higher employability higher productivity, 
and higher earnings for project beneficiaries. The Improved Learning 
Environment Infrastructure Activity is expected to produce improved 
student learning outcomes through learning environments that facilitate 
increased time on task and increased attendance. The Training Educators 
for Excellence Activity is expected to yield improved classroom 
teaching and better management of the educational system through the 
support of teachers' and principals' continued professional 
development. The Education Assessment Support Activity is expected to 
yield improved classroom teaching and better management of the 
educational system through better supply of classroom, national, and 
international assessment information.
    (b) The objective of the Industry-led Skills and Workforce 
Development Project is to increase the availability of STEM technicians 
to meet industry demand, which is expected to lead to higher 
productivity, employability and earnings for project beneficiaries. The 
Strengthening Sector Policy and Provider Practice Activity is expected 
to identify existing good practice through industry recognition awards, 
and strengthen, document, and disseminate these practices to other 
providers. In addition, this Activity is expected to identify and 
implement target policy reforms in the sector which promote a TVET 
sector with improved industry engagement. The Competitive Program 
Improvement Grants Activity is expected to increase the provision of 
high-quality TVET programming, especially in higher levels of TVET 
qualifications.
    (c) The objective of the STEM Higher Education Project is to 
increase the availability of quality engineers and professionals from 
other STEM disciplines in the Georgian labor market, which is expected 
to increase the productivity, employability and earnings of project 
beneficiaries. In addition, the project expects to reduce the number of 
Georgian students studying abroad (i.e. by the proportion

[[Page 48490]]

of project beneficiaries who would have otherwise pursued a degree 
abroad) and to reduce the number of foreign workers hired by Georgian 
firms (i.e. the number of STEM jobs which are filled locally, but would 
have otherwise required the procurement of a foreign specialist). In 
order to achieve the above objectives, the STEM Higher Education 
Project expects to create improved incentives and support structures 
for world-class researchers/professors, which will be achieved either 
through support for ABET accreditation, providing degrees from U.S. 
institutions within Georgia, or a combination thereof.
[GRAPHIC] [TIFF OMITTED] TN08AU13.006


[[Page 48491]]


[GRAPHIC] [TIFF OMITTED] TN08AU13.007

3. Monitoring Component

    To monitor progress toward the achievement of the objectives of the 
Compact, the Monitoring Component of the M&E Plan will identify: (i) 
The Indicators (as defined below); (ii) the definitions of the 
Indicators; (iii) the sources and methods for data collection; (iv) the 
frequency for data collection; (v) the party or parties responsible for 
collecting and analyzing relevant data; and (vi) the timeline for 
reporting on each Indicator to MCC.
    Further, the Monitoring Component will track changes in the 
selected Indicators for measuring progress towards the achievement of 
the Project Objectives during the Compact Term. MCC and the Government 
intend to continue monitoring and evaluating the long-term impacts of 
the Compact after Compact expiration. The M&E Plan will establish 
baselines which measure the situation prior to a development 
intervention, against which progress can be assessed or comparisons 
made (each, a ``Baseline''). The Government will collect Baselines on 
the selected Indicators or verify already collected Baselines where 
applicable and as set forth in the M&E Plan.
(a) Indicators
    The M&E Plan will measure the results of the Program using 
quantifiable, objective and reliable data (``Indicators''). Each 
indicator will have benchmarks that specify the expected value and the 
expected time by which that result will be achieved (``Target''). The 
M&E Plan will be based on a logical framework approach that classifies 
indicators as goal, outcome, output, and process. The Compact Goal 
indicators (``Goal Indicators'') will indirectly measure the economic 
growth and poverty reduction goal for each Project. Second, Outcome 
Indicators (``Outcome Indicators'') will measure the intermediate 
results of the Project Activities. Output Indicators (``Output 
Indicators'') will directly measure Project Activities, and finally 
Process Indicators (``Process Indicators'') will measure progress 
toward the completion of Project Activities. For Outcome Indicators and 
Goal Indicators, the M&E Plan will define a strategy for obtaining and 
verifying the value of the baselines values, as necessary. All 
indicators will be disaggregated by gender, ethnic group and other 
beneficiary types to the extent practical. Subject to prior written 
approval from MCC, MCA-Georgia may add indicators or refine the 
definitions, baselines and Targets of existing indicators.
(i) Compact Indicators
    (1) Goal. The Program will contribute to economic growth and 
poverty

[[Page 48492]]

reduction nationwide, but the results are attributable to many factors 
in the economy. The M&E Plan will contain the following Indicators 
related to the Compact Goal:
    (A) Higher (lifetime) earnings for Project beneficiaries;
    (B) Improved employability of Project beneficiaries; and
    (C) Increased household investments in education (i.e. increases in 
years of education attained).
    (2) Outcome, Output, and Process Indicators. The M&E Plan will 
contain the Indicators listed in the following tables. Indicators that 
can be reported on at least an annual basis will be included in 
quarterly monitoring indicator reports, while indicators that require 
survey data or a longer time period to track will be tracked for 
evaluation purposes. Goal and Outcome Indicators will be used for 
evaluation purposes, whether during or after the Compact period, but 
will not be tracked for regular monitoring efforts. The M&E Plan will 
reflect revisions to indicators in Annex III as well as additional 
indicators identified as useful for project monitoring. MCC's Common 
Indicators for Education will also be included in the M&E Plan, as 
relevant.

                               Improving General Education Project: Improved Learning Environment Infrastructure Activity
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Result                    Indicator             Definition                  Unit                Baseline              Compact target
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Goal Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Further Education...............  Transition rate     The number of students   Percentage..............  TBD.............  TBD.
                                   from 9th to 10th    who enter 10th grade
                                   grade.              divided by number of
                                                       students who completed
                                                       9th grade.
                                  Percentage of 10th  The number of 12th       Percentage..............  TBD.............  TBD.
                                   grade entrants      grade students who
                                   who graduate from   take and pass the 11th-
                                   12th grade.         12th grade exit
                                                       examinations in math
                                                       and science, divided
                                                       by the number of 10th
                                                       grade entrants in same
                                                       cohort.
                                  Percent of high     The number of 12th       Percentage..............  TBD.............  TBD.
                                   school graduates    grade students who
                                   who enter           take the university
                                   university          entrance examination
                                   studies.            and are placed in a
                                                       university program,
                                                       divided by the number
                                                       of 12th grade students
                                                       who take the 12th
                                                       grade exit exam.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Outcome Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decreased Absenteeism...........  Student attendance  To be defined in         Percentage..............  TBD.............  TBD (increase over baseline).
                                   rates.              collaboration with
                                                       standard measurement
                                                       practices in Georgia
                                                       (e.g. average
                                                       percentage of enrolled
                                                       students marked as
                                                       present during one-
                                                       month period of
                                                       analysis).
                                  Teacher attendance  To be defined in         Percentage..............  TBD.............  TBD (increase over baseline).
                                   rates.              collaboration with
                                                       standard measurement
                                                       practices in Georgia
                                                       (e.g. average
                                                       percentage of teachers
                                                       marked as present
                                                       during one-month
                                                       period of analysis).
Improved Student Learning         Average             Specific evaluation      Number..................  TBD.............  TBD.
 Outcomes.                         Standardized Test   strategies will be
                                   Scores.             employed to track
                                                       improvements in TIMSS
                                                       (Trends in Mathematics
                                                       and Science Study),
                                                       PISA (Programme for
                                                       International Student
                                                       Assessment), ICILS
                                                       (International
                                                       Computer and
                                                       Information Literacy
                                                       Study), TALIS
                                                       (Teaching and Learning
                                                       International Survey),
                                                       Classroom Assessments,
                                                       and National
                                                       Assessments.
Increased Time On-Task..........  Time study of       Measurement of changes   Percentage..............  TBD.............  TBD.
                                   students' daily     in proportion of time
                                   time allocation.    spent on various
                                                       education-enhancing
                                                       activities as well as
                                                       overall amount of time
                                                       spent at school.
Rehabilitated School Facilities.  Average classroom   Average temperature of   Degrees Celsius.........  TBD.............  TBD (increase over baseline).
                                   temperature         completed classrooms
                                   differential in     during a one-month
                                   winter.             sample of observations
                                                       with respect to
                                                       comparison classroom.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Output Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rehabilitated School Facilities.   of        The number of            Number..................  0...............  130.
                                   schools fully       educational facilities
                                   rehabilitated.      constructed or
                                                       rehabilitated
                                                       according to standards
                                                       stipulated in MCA
                                                       contracts signed with
                                                       implementers.

[[Page 48493]]

 
                                   of        The total number of      Number..................  0...............  130.
                                   science labs        science labs installed
                                   installed and       through MCC-funded
                                   equipped.           school
                                                       rehabilitations.
                                                       Science lab must be
                                                       operational in order
                                                       to be counted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Process Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rehabilitated School Facilities.  Signing of Phase 1  Quarter in which Phase   Date....................  n/a.............  Q2.
                                   Construction        1 construction
                                   Contracts.          contracts are signed.
                                  Installation of     Quarter in which all     Date....................  n/a.............  Q4.
                                   Phase 1 Science     Phase 1 schools'
                                   Labs.               science laboratories
                                                       are installed.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                     Improving General Education Project: Training Educators for Excellence Activity
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Result                    Indicator             Definition                  Unit                Baseline              Compact target
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Outcome Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Improved Classroom Teaching.....  Teacher             Pre-test, post-test      Number..................  TBD.............  TBD (increase over baseline).
                                   improvement of      comparison of trained
                                   content knowledge   teachers' knowledge in
                                   over baseline       training-relevant
                                   score.              content areas.
Improved Student Learning         Improved internal   As possible, evaluation  Number..................  TBD.............  TBD (increase over baseline).
 Outcomes.                         efficiency          strategy will attempt
                                   measures            to measure changes in
                                   (repetition         schools' internal
                                   rates, internal     efficiency which are
                                   transition rates,   attributable to
                                   etc.).              compact training
                                                       activity.
Improved Student Learning         Students'           As possible, evaluation  Number..................  TBD.............  0.18 SD increase over
 Outcomes.                         standardized test   strategy will attempt                                                baseline.
                                   scores.             to measure
                                                       attributable changes
                                                       in average student
                                                       score on test
                                                       instrument related to
                                                       areas relevant to
                                                       teacher training.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Output Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
School-based Professional          school-   The number of school-    Number..................  0...............  2,000.
 Development Coordinators          based               based professional
 Trained.                          professional        development
                                   development         coordinators who
                                   coordinators        complete MCC-supported
                                   trained.            training focused on
                                                       supporting principals
                                                       and teachers in
                                                       implementing new
                                                       techniques.
Principals Trained..............   school    The number of school     Number..................  0...............  2,000.
                                   principals          principals who
                                   trained.            complete MCC-supported
                                                       training focused on
                                                       supporting teachers in
                                                       implementing new
                                                       techniques.
Teachers Trained................   science,  The number of science,   Number..................  0...............  23,400.
                                   math, English,      math, English, and ICT
                                   and ICT             instructors who
                                   instructors         complete MCC-supported
                                   trained.            training focused on
                                                       instructional quality
                                                       as defined by the
                                                       compact training
                                                       activity.
                                  % of teachers       Calculated as the        Percentage..............  0...............  74%.
                                   enrolled in         number of teachers
                                   training who        completing compact's
                                   complete training   designed training
                                   course.             course divided by
                                                       total number of
                                                       training enrollees.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Process Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Teachers Trained................  Completion of       Defined as the Quarter   Date....................  n/a.............  Q6.
                                   first cohort of     in which first cohort
                                   teacher training.   of at least 100
                                                       teachers completes
                                                       training activity.
Improved Training Framework       Completion of       Defined as the Quarter   Date....................  n/a.............  Q4.
 (Capacity Building).              teacher training    in which design
                                   design framework.   consultant's final
                                                       activity design
                                                       deliverable is
                                                       formally approved by
                                                       MCA.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 48494]]


                                           Improving General Education Project: Education Assessment Activity
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Result                    Indicator             Definition                  Unit                Baseline              Compact target
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Outcome Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Improved Classroom Teaching.....  % of secondary       of secondary   Percentage..............  0...............  50%.
                                   teachers            teachers implementing
                                   implementing in-    in-class assessments
                                   class assessment    divided by total
                                   tools.              number of secondary
                                                       teachers.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Output Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Capacity Building...............   of        Number of staff trained  Number..................  0...............  TBD.
                                   Ministry            by MCC-funded,
                                   officials trained   assessment-relevant
                                   (including at sub-  activities at Ministry
                                   Ministry            and sub-Ministry
                                   agencies, e.g.      entities.
                                   NCEQE).
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                           Improving General Education Project: Education Assessment Activity
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Result                    Indicator             Definition                  Unit                Baseline              Compact target
--------------------------------------------------------------------------------------------------------------------------------------------------------
Design Assessment Frameworks....   of         of national    Number..................  0...............  TBD.
                                   national            assessments/testing
                                   assessment/         frameworks developed
                                   testing             and implemented with
                                   frameworks.         MCC funding.
Int'l & National Assessments....   of         of             Number..................  0...............  5.
                                   international       international
                                   assessments.        assessments
                                                       implemented with MCC
                                                       funding. Indicator
                                                       will be counted upon
                                                       completion of full
                                                       reporting cycle
                                                       specific to each
                                                       international
                                                       assessment (TIMSS,
                                                       TIMSS Adv., PISA,
                                                       ICILS and TALIS).
In-class Assessments............   of         of secondary   Number..................  0...............  TBD.
                                   secondary           classrooms documented
                                   teachers            by regional
                                   implementing in-    ministerial staff as
                                   class assessments.  having implemented MCC-
                                                       funded in-class
                                                       assessments.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Process Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Int'l & National Assessments....  Completion of       Quarter in which MCC-    Date....................  n/a.............  Q8.
                                   pilot testing of    funded national
                                   national            assessment instruments
                                   assessment          are implemented in
                                   instruments.        pilot form for
                                                       feedback and further
                                                       development.
                                  Full-scale          Quarter in which MCC-    Date....................  n/a.............  Q12.
                                   implementation of   funded national
                                   national            assessment instruments
                                   assessment          are implemented at
                                   instrument.         full scale, as
                                                       determined in the
                                                       compact assessment
                                                       activity.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                  Industry-led Skills and Workforce Development Project
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Result                    Indicator             Definition                  Unit                Baseline              Compact target
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Goal Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Employability...................  Employment rate     Average post-graduation  Percentage..............  n/a.............  9% increase over comparison
                                   differential of     employment rate of                                                   group.
                                   graduates of MCC-   graduates of MCC-
                                   supported grantee   supported grantee
                                   programs.           programs with respect
                                                       to students graduating
                                                       from non-priority
                                                       areas (one year after
                                                       graduation).
Individual Wages................  Wage differential   Average wage             Number..................  n/a.............  23% increase over comparison
                                   of graduates of     differential of                                                      group.
                                   MCC-supported       graduates of MCC-
                                   grantee programs.   supported grantee
                                                       programs with respect
                                                       to students graduating
                                                       from non-priority
                                                       areas (one year after
                                                       graduation).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Outcome Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased Provision of Quality    Enrollment in       Nationwide enrollment    Percentage..............  TBD.............  TBD.
 TVET (Esp. Qualifications-        qualifications-     in qualifications-
 granting Levels).                 granting programs   granting TVET
                                   (as a % of total    programs, especially
                                   TVET enrollment).   level IV and V
                                                       coursework.

[[Page 48495]]

 
Increased Industry Co-investment  Industry co-        Industry co-investment   US Dollars..............  0...............  30% of grant outlays.
 in TVET.                          investment in       in supported programs,
                                   TVET provision.     including both cash
                                                       and in kind support.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Output Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased Provision of Quality    Number of TVET      Number of competitive    Number..................  0...............  TBD.
 TVET (Esp. Qualifications-        grants fully        grants whose full
 granting Levels).                 disbursed.          amount is disbursed
                                                       before the compact end
                                                       date.
Screened, Quality TVET Programs.   of        Number of students       Number..................  0...............  420.
                                   graduates per       graduating in one year
                                   year.               from all program
                                                       recipients of Program
                                                       development grant
                                                       funding.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Process Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grant Funding (Screened for       Date first grant    Quarter in which first   Date....................  n/a.............  Q5.
 Linkage to Industry Demand).      agreement is        grant agreement is
                                   signed.             signed with the winner
                                                       of competitively-
                                                       selected TVET provider.
                                  Date final grant    Quarter in which final   Date....................  n/a.............  Q16.
                                   agreement is        grant agreement is
                                   signed.             signed with the winner
                                                       of competitively-
                                                       selected TVET provider.
                                  Total grant         Total disbursement of    US Dollars..............  0...............  TBD.
                                   outlays.            grant funding under
                                                       compact's competitive
                                                       grant facility.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                              STEM Higher Education Project
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Result                    Indicator             Definition                  Unit                Baseline              Compact target
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Goal Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual Wages................  Wage differential   Average wage             Number..................  TBD.............  TBD (44% increase over top
                                   of the graduates    differential of                                                      Georgian degree).
                                   of MCC-supported    graduates of MCC-
                                   Bachelor's          supported Bachelor's
                                   program.            program with respect
                                                       to average wage of
                                                       comparable graduates
                                                       (one year after
                                                       graduation).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Outcome Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Engineering/Technology            Formal ABET         This indicator assumes   Date....................  n/a.............  TBD.
 Accreditation (ABET).             accreditation for   that the option of
                                   Georgian degree     ABET accreditation is
                                   program.            pursued. This
                                                       indicator is not
                                                       relevant if this
                                                       option is not pursued
                                                       with Compact funds.
Reduced Imports of Human Capital  Proportion of       Evaluation of the        Percentage..............  TBD.............  TBD.
 (Foreign Labor).                  imported workers    number of foreign
                                   in relevant         workers hired in
                                   fields.             relevant fields.
                                                       ``Relevant fields''
                                                       will be the specific
                                                       fields in which the
                                                       University Partnership
                                                       will be granting
                                                       Bachelor's degree.
Reduced Imports of Education      Proportion of       Evaluation of the        Percentage..............  TBD.............  TBD.
 (Study Abroad).                   Bachelor's-level    number of Georgian
                                   students who        students studying
                                   study abroad in     abroad in relevant
                                   relevant fields.    fields. ``Relevant
                                                       fields'' will be the
                                                       specific fields in
                                                       which the University
                                                       Partnership will be
                                                       granting Bachelor's
                                                       degree.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Output Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bachelor's Degrees from U.S.      Number of enrolled  The total number of      Number..................  0...............  1018.
 University (Quality Proxy).       degree candidates.  students enrolled in
                                                       MCC degree program in
                                                       during the quarter
                                                       data is reported.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Process Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S.-Georgia University           Signing of          The quarter in which a   Date....................  n/a.............  EIF.
 Partnership.                      partnership         formal partnership
                                   agreement.          agreement is signed
                                                       between U.S.
                                                       institution(s) and
                                                       Georgian
                                                       institution(s).

[[Page 48496]]

 
Increased Availability of         First cohort of     The quarter in which a   Date....................  n/a.............  Q7.
 Quality Engineers.                students enters     cohort of incoming
                                   MCC-funded          students begins study
                                   Bachelor's          in an MCC-funded
                                   program.            Bachelor's program.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (b) Data Collection and Reporting. The M&E Plan will establish 
guidelines for data collection and reporting, and identify the 
responsible parties. Compliance with data collection and reporting 
timelines will be conditions for Disbursements for the relevant 
Activities as set forth in the Program Implementation Agreement. The 
M&E Plan will specify the data collection methodologies, procedures, 
and analysis required for reporting on results at all levels. The M&E 
Plan will describe any interim MCC approvals for data collection, 
analysis, and reporting plans.
    (c) Data Quality Reviews. As determined in the M&E Plan or as 
otherwise requested by MCC, the quality of the data gathered through 
the M&E Plan will be reviewed to ensure that data reported are as 
valid, reliable, and timely as resources will allow. The objective of 
any data quality review will be to verify the quality and the 
consistency of performance data across different implementation units 
and reporting institutions. Such data quality reviews also will serve 
to identify where those levels of quality are not possible, given the 
realities of data collection.
    (d) Management Information System. The M&E Plan will describe the 
information system that will be used to collect data, store, process 
and deliver information to relevant stakeholders in such a way that the 
Program information collected and verified pursuant to the M&E Plan is 
at all times accessible and useful to those who wish to use it. The 
system development will take into consideration the requirements and 
data needs of the components of the Program and will be aligned with 
existing MCC systems, other service providers, and ministries.
    (e) Role of MCA-Georgia. The monitoring and evaluation of this 
Compact spans three discrete Projects and will involve a variety of 
governmental, nongovernmental, and private sector institutions. In 
accordance with the designation contemplated by Section 3.2(b) of this 
Compact, MCA-Georgia is responsible for implementation of the M&E Plan. 
MCA-Georgia will oversee all Compact-related monitoring and evaluation 
activities conducted for each of the Projects, ensuring that data from 
all implementing entities is consistent, accurately reported and 
aggregated into regular Compact performance reports as described in the 
M&E Plan.
    (f) Role of other Implementing Partners. During the finalization of 
the M&E Plan prior to the entry into force of the Compact, the 
potential monitoring and evaluation role of other agencies and 
Implementing Entities, including but not limited to GeoStat, EMIS, 
ESIDA, TPDC, and NAEC will be assessed. The Government and MCC will 
make every effort to leverage agency missions, expertise, and data-
collection services to support the Compact. This may result in specific 
responsibilities being assumed by one or more of these agencies, as 
appropriate.

4. Evaluation Component

    The Evaluation Component of the M&E Plan will contain three types 
of evaluations: (i) Impact evaluations; (ii) performance evaluations; 
and (iii) special studies. The Evaluation Component of the M&E Plan 
will describe the purpose of the evaluation, methodology, timeline, 
required MCC approvals, and the process for collection and analysis of 
data for each evaluation. The results of all evaluations will be made 
publicly available in accordance with MCC's Policy for Monitoring and 
Evaluation of Compacts and Threshold Programs.
    (a) Independent Evaluations. The M&E Plan will include a 
description of the methods to be used for impact evaluations and plans 
for integrating the evaluation method into Project design. Based on in-
country consultation with stakeholders, the strategies outlined below 
were jointly determined as having the strongest potential for rigorous 
impact evaluation. The M&E Plan will further outline in detail these 
methodologies. Comprehensive impact evaluation strategies are to be 
included in the M&E Plan. The following is a summary of the potential 
impact evaluation methodologies:
(i) Improving General Education Quality Project
    (1) Improved Learning Environment Infrastructure Activity. This 
Activity is expected to receive independent impact evaluation in which 
outcomes of this Activity will be rigorously assessed and attributed to 
MCC investments in school rehabilitation. MCC and MCA-Georgia have 
developed plans to employ a Regression Discontinuity Design (``RDD'') 
evaluation to assess the impact of this Activity. This RDD design 
utilizes a scoring system to rank the program's target population by 
priority for rehabilitation and through which a cutoff may be 
determined. The schools scoring above this cutoff will be selected as 
the treatment group for this Activity. The concept driving the RDD 
method is that those schools near the cutoff, whether above (treatment) 
or below (control) will be statistically comparable, allowing for an 
estimation of program impact.
    In order to ensure the validity of the Activity's evaluation 
methodology, the Government will ensure that:
    (A) no school facility designated as ``Comparison/Control'' within 
the impact evaluation framework will receive Government- or donor-
funded rehabilitation beyond those expenditures necessary for 
continuing operations, insomuch as donor-funded rehabilitations are 
within the control of the Government;
    (B) schools selected as beneficiaries of MCC rehabilitation will 
neither be systematically targeted nor systematically precluded from 
other Government activities, funding, or support; and
    (C) schools designated as ``Comparison/Control'' will neither be 
systematically targeted nor systematically precluded from other 
Government activities, funding, or support.
    (2) Training Educators for Excellence Activity. The component of 
this Activity which focuses on the implementation of teacher training 
is amenable to impact evaluation, yet further development of the 
implementation structure and timelines will be necessary in order to 
determine the specific methodology. MoES and TPDC will collaborate with 
MCC and MCA-Georgia to determine the ideal design of this activity 
which enables the rigorous evaluation of the projected outcomes, 
namely, improved

[[Page 48497]]

teacher knowledge and improved student learning outcomes.
    (3) Education Assessment Support Activity. As this Activity will be 
focused on improving the information basis for policy decisions, 
rigorous evaluation will not be viable for this Activity. Nevertheless, 
the outputs of this Activity (i.e. the various results of assessment 
tools) will be a key input into the evaluations of the two preceding 
evaluations, and the interaction between this Activity and the M&E 
Plan's evaluation framework will be key to the successful evaluation of 
the Improving General Education Quality Project as a whole.
(ii) Industry-Led Skills and Workforce Development Project
    (1) Plans are being developed to designate evaluation resources for 
grant proposals which develop a rigorous plan for the evaluation of the 
grant recipients' beneficiaries. In addition, all grant proposals will 
be required to include an evaluation plan, whether for rigorous impact 
evaluation or not (i.e. performance evaluation).
(ii) STEM Higher Education Project
    (1) As the recreation of counterfactual scenarios would be 
difficult, rigorous impact evaluation is not expected to be feasible 
for this Project as a whole. Plans are being developed for tracer 
studies to detect impacts on beneficiaries (tertiary graduates) in 
comparison to non-beneficiaries with similar characteristics. 
Furthermore, any potential scholarship-granting component may yield the 
opportunity to rigorously compare the outcomes between beneficiaries 
and non-beneficiaries. Finally, plans are in place for an evaluation 
which focuses on the processes through which the Project was able to 
produce anticipated outputs.
    (b) Final Evaluation. The M&E Plan will make provision for final 
Project level evaluations (``Final Evaluations''). With the prior 
written approval of MCC, the Government will engage independent 
evaluators to conduct the Final Evaluations at or near the end of each 
Project. The Final Evaluations will review progress during Compact 
implementation and provide a qualitative context for interpreting 
monitoring data and evaluation findings. They must at a minimum (i) 
evaluate the efficiency and effectiveness of the Activities; (ii) 
determine if and analyze the reasons why the Compact Goal and Project 
Objective(s), outcome(s) and output(s) were or were not achieved; (iii) 
identify positive and negative unintended results of the Program; (iv) 
provide lessons learned that may be applied to similar projects; and 
(v) assess the likelihood that results will be sustained over time.
    (c) Special Studies. The M&E Plan will include a description of the 
methods to be used for special studies, as necessary, funded through 
this Compact or by MCC. Plans for conducting the special studies will 
be determined jointly between the Government and MCC before the 
approval of the M&E Plan. The M&E Plan will identify and make provision 
for any other special studies, ad hoc evaluations, and research that 
may be needed as part of the monitoring and evaluating of this Compact. 
Examples of potential special studies are further studies of 
absenteeism in Georgia, the demand for and utilization of science labs, 
and/or further analysis of the constraints to industry engagement in 
TVET. As necessary, MCC or the Government may request special studies 
or ad hoc evaluations of Projects, Activities, or the Program as a 
whole prior to the expiration of the Compact Term. When MCA-Georgia 
engages an evaluator, the engagement will be subject to the prior 
written approval of MCC. For all evaluations of Compact Projects, 
whether commissioned by MCC, MCA-Georgia or the Government, contract 
terms shall ensure non-biased results and the publication of results.
    (d) Request for Ad Hoc Evaluation or Special Study. If the 
Government requires an ad hoc independent evaluation or special study 
at the request of the Government for any reason, including for the 
purpose of contesting an MCC determination with respect to a Project or 
Activity or to seek funding from other donors, no MCC Funding resources 
may be applied to such evaluation or special study without MCC's prior 
written approval.

5. Other Components of the M&E Plan

    In addition to the monitoring and evaluation components, the M&E 
Plan will include the following components for the Program, Projects 
and Activities, including, where appropriate, roles and 
responsibilities of the relevant parties and providers:
    (a) Costs. A detailed cost estimate for all components of the M&E 
Plan; and
    (b) Assumptions and Risks. Any assumption or risk external to the 
Program that underlies the accomplishment of the Project Objectives and 
Activity outcomes and outputs. However, such assumptions and risks will 
not excuse any Party's performance unless otherwise expressly agreed to 
in writing by the other Party.

6. Approval and Implementation of the M&E Plan

    The approval and implementation of the M&E Plan, as amended from 
time to time, will be in accordance with the Program Implementation 
Agreement, any other relevant Supplemental Agreement and the MCC Policy 
for Monitoring and Evaluation of Compacts and Threshold Programs.

7. Post-Compact M&E Plan

    In conjunction with the Program Closure Plan, MCC and MCA will 
develop a Post-Compact M&E Plan designed to observe the persistence of 
benefits created under the Compact. This plan should describe future 
monitoring and evaluation activities, identify the individuals and 
organizations that would undertake these activities, and provide a 
budget framework for future monitoring and evaluation which would draw 
upon both MCC and country resources, as agreed by each party. The Post-
Compact M&E Plan should build directly off the Compact M&E Plan.

Annex IV Conditions Precedent to Disbursement of Compact Implementation 
Funding

    This Annex IV sets forth the conditions precedent applicable to 
Disbursements of Compact Implementation Funding (each a ``CIF 
Disbursement''). Capitalized terms used in this Annex IV and not 
defined in this Compact will have the respective meanings assigned 
thereto in the Program Implementation Agreement. Upon execution of the 
Program Implementation Agreement, each CIF Disbursement will be subject 
to the terms of the Program Implementation Agreement.

1. Conditions Precedent to Initial CIF Disbursement

    Each of the following must have occurred or been satisfied prior to 
the initial CIF Disbursement. The Government (or MCA-Georgia) has 
delivered to MCC:
    (a) an interim fiscal accountability plan acceptable to MCC; and
    (b) a CIF procurement plan acceptable to MCC.

2. Conditions Precedent to all CIF Disbursements (Including Initial CIF 
Disbursement)

    Each of the following must have occurred or been satisfied prior to 
each CIF Disbursement:
    (a) The Government (or MCA-Georgia) has delivered to MCC the 
following documents, in form and substance satisfactory to MCC:

[[Page 48498]]

    (i) A completed Disbursement Request, together with the applicable 
Periodic Reports, for the applicable Disbursement Period, all in 
accordance with the Reporting Guidelines;
    (ii) a certificate of the Government (or MCA-Georgia), dated as of 
the date of the CIF Disbursement Request, in such form as provided by 
MCC;
    (iii) if a Fiscal Agent has been engaged, a Fiscal Agent 
Disbursement Certificate; and
    (iv) if a Procurement Agent has been engaged, a Procurement Agent 
Disbursement Certificate.
    (b) If any proceeds of the CIF Disbursement are to be deposited in 
a bank account, MCC has received satisfactory evidence that (i) the 
Bank Agreement has been executed and (ii) the Permitted Accounts have 
been established;
    (c) Appointment of an entity or individual to provide fiscal agent 
services, as approved by MCC, until such time as the Government 
provides to MCC a true and complete copy of a Fiscal Agent Agreement, 
duly executed and in full force and effect, and the fiscal agent 
engaged thereby is mobilized;
    (d) Appointment of a Procurement Director of MCA-Georgia, as 
approved by MCC, until such time as the Government provides to MCC a 
true and complete copy of a Procurement Operations Manual, duly 
executed and in full force and effect;
    (e) MCC is satisfied, in its sole discretion, that (i) the 
activities being funded with such CIF Disbursement are necessary, 
advisable or otherwise consistent with the goal of facilitating the 
implementation of the Compact and will not violate any applicable law 
or regulation; (ii) no material default or breach of any covenant, 
obligation or responsibility by the Government, MCA-Georgia or any 
Government entity has occurred and is continuing under this Compact or 
any Supplemental Agreement; (iii) there has been no violation of, and 
the use of requested funds for the purposes requested will not violate, 
the limitations on use or treatment of MCC Funding set forth in Section 
2.7 of this Compact or in any applicable law or regulation; (iv) any 
Taxes paid with MCC Funding through the date 90 days prior to the start 
of the applicable Disbursement Period have been reimbursed by the 
Government in full in accordance with Section 2.8(c) of this Compact; 
and (v) the Government has satisfied all of its payment obligations, 
including any insurance, indemnification, tax payments or other 
obligations, and contributed all resources required from it, under this 
Compact and any Supplemental Agreement;
    (f) For any CIF Disbursement occurring after this Compact has 
entered into force in accordance with Article 7: MCC is satisfied, in 
its sole discretion, that (i) MCC has received copies of any reports 
due from any technical consultants (including environmental auditors 
engaged by MCA-Georgia) for any Activity since the previous 
Disbursement Request, and all such reports are in form and substance 
satisfactory to MCC; (ii) the Implementation Plan Documents and Fiscal 
Accountability Plan are current and updated and are in form and 
substance satisfactory to MCC, and there has been progress satisfactory 
to MCC on the components of the Implementation Plan for any relevant 
Projects or Activities related to such CIF Disbursement; (iii) there 
has been progress satisfactory to MCC on the M&E Plan and Social and 
Gender Integration Plan for the Program or relevant Project or Activity 
and substantial compliance with the requirements of the M&E Plan and 
Social and Gender Integration Plan (including the targets set forth 
therein and any applicable reporting requirements set forth therein for 
the relevant Disbursement Period); (iv) there has been no material 
negative finding in any financial audit report delivered in accordance 
with this Compact and the Audit Plan, for the prior two quarters (or 
such other period as the Audit Plan may require); (v) MCC does not have 
grounds for concluding that any matter certified to it in the related 
MCA Disbursement Certificate, the Fiscal Agent Disbursement Certificate 
or the Procurement Agent Disbursement Certificate is not as certified; 
and (vi) if any of the officers or key staff of MCA-Georgia have been 
removed or resigned and the position remains vacant, MCA-Georgia is 
actively engaged in recruiting a replacement; and
    (g) MCC has not determined, in its sole discretion, that an act, 
omission, condition, or event has occurred that would be the basis for 
MCC to suspend or terminate, in whole or in part, the Compact or MCC 
Funding in accordance with Section 5.1 of this Compact.

Annex V Definitions

    ABET has the meaning provided in Section 7.2(c) and paragraph 3(a) 
of Part B of Annex I.
    Activity has the meaning provided in Part B of Annex I.
    Additional Representative has the meaning provided in Section 4.2.
    Audit Guidelines has the meaning provided in Section 3.8(a).
    Baseline has the meaning provided in paragraph 3 of Annex III.
    CIF Disbursement has the meaning provided in Annex IV.
    Compact has the meaning provided in the Preamble.
    Compact Goal has the meaning provided in Section 1.1.
    Compact Implementation Funding has the meaning provided in Section 
2.2(a).
    Compact Records has the meaning provided in Section 3.7(a).
    Compact Term has the meaning provided in Section 7.4.
    Covered Provider has the meaning provided in Section 3.7(c).
    Disbursement has the meaning provided in Section 2.4.
    ESIDA has the meaning provided in paragraph 1(a) of Part B of Annex 
I.
    Evaluation Component has the meaning provided in paragraph 1 of 
Annex III.
    Excess CIF Amount has the meaning provided in Section 2.2(d).
    Final Evaluations has the meaning provided in paragraph 4(b) of 
Annex III.
    Fiscal Agent has the meaning provided in paragraph 3 of Part C of 
Annex I.
    First Compact has the meaning provided in paragraph 1(a) of Part A 
of Annex I.
    Georgia has the meaning provided in the Preamble.
    GIZ has the meaning provided in paragraph 1(e) of Part B of Annex 
I.
    Goal Indicators has the meaning provided in paragraph 3(a) of Annex 
III.
    Governance Guidelines means MCC's Guidelines for Accountable 
Entities and Implementation Structures, as such may be posted on MCC's 
Web site from time to time.
    Government has the meaning provided in the Preamble.
    G-PriEd has the meaning provided in paragraph 1(f) of Part B of 
Annex I.
    Grant has the meaning provided in Section 3.6(b).
    GRDF means Georgia Regional Development Fund, LLC, a limited 
liability company organized under the laws of the State of Delaware.
    GRDF Funding means any assets, interest, dividends, sale proceeds 
or any other income or property received and owned by GRDF and/or 
obtained or derived from GRDF by MCA-Georgia, the Service Agency of the 
Ministry of Finance of Georgia, or any other Government agency, person 
or entity, whether directly or indirectly.
    ICT has the meaning provided in paragraph 1(a)(ii) of Part B of 
Annex I.
    Implementation Letter has the meaning provided in Section 3.5.

[[Page 48499]]

    Implementing Entity has the meaning provided in paragraph 2 of Part 
C of Annex I.
    Implementing Entity Agreement has the meaning provided in paragraph 
2 of Part C of Annex I.
    Improving General Education Quality Project means the Project 
described in paragraph 1 of Part B of Annex I and whose Project 
Objectives are outlined in Section 1.3(a).
    Indicators has the meaning provided in paragraph 3(a) of Annex III.
    Industry-led Skills and Workforce Development Project means the 
Project described in paragraph 2 of Part B of Annex I and whose Project 
Objectives are outlined in Section 1.3(b).
    Inspector General has the meaning provided in Section 3.7(d).
    Intellectual Property means all registered and unregistered 
trademarks, service marks, logos, names, trade names and all other 
trademark rights; all registered and unregistered copyrights; all 
patents, inventions, shop rights, know how, trade secrets, designs, 
drawings, art work, plans, prints, manuals, computer files, computer 
software, hard copy files, catalogues, specifications, and other 
proprietary technology and similar information; and all registrations 
for, and applications for registration of, any of the foregoing, that 
are financed, in whole or in part, using MCC Funding.
    M&E Plan has the meaning provided in Annex III.
    Management Team has the meaning provided in paragraph 1(a) of Part 
C of Annex I.
    MCA Act has the meaning provided in Section 2.2(a).
    MCA-Georgia has the meaning provided in Section 3.2(b).
    MCC has the meaning provided in the Preamble.
    MCC Environmental Guidelines has the meaning provided in Section 
2.7(c).
    MCC Funding has the meaning provided in Section 2.3.
    MCC Gender Policy means the MCC Gender Policy (including any 
guidance documents issued in connection with the guidelines) posted 
from time to time on the MCC Web site or otherwise made available to 
the Government.
    MCC M&E Policy has the meaning provided in Annex III.
    MCC Program Procurement Guidelines has the meaning provided in 
Section 3.6(a).
    MCC Web site has the meaning provided in Section 2.7.
    Ministry has the meaning provided in Schedule A of Annex VI.
    MoES has the meaning provided in paragraph 1(a)(i) of Part B of 
Annex I.
    Monitoring Component has the meaning provided in paragraph 1 of 
Annex III.
    Multi-Year Financial Plan Summary has the meaning provided in 
paragraph 1 of Annex II.
    NAEC has the meaning provided in paragraph 1(a)(iii) of Part B of 
Annex I.
    NCEQE has the meaning provided in paragraph 3(e)(i) of Part B of 
Annex I.
    New GRDF Operational Documents has the meaning provided in 
paragraph 3(a)(iii) of Part B of Annex I.
    O&M has the meaning provided in paragraph 1(a)(i) of Part B of 
Annex I.
    Outcome Indicators has the meaning provided in paragraph 4(a) of 
Annex III.
    Output Indicators has the meaning provided in paragraph 4(a) of 
Annex III.
    Party and Parties have the meaning provided in the Preamble.
    Permitted Account has the meaning provided in Section 2.4.
    Principal Representative has the meaning provided in Section 4.2.
    Process Indicators has the meaning provided in paragraph 3(a) of 
Annex III.
    Procurement Director has the meaning provided in paragraph 4 of 
Part C of Annex I.
    Program has the meaning provided in the Recitals.
    Program Assets means any assets, goods or property (real, tangible 
or intangible) purchased or financed in whole or in part (directly or 
indirectly) by MCC Funding.
    Program Funding has the meaning provided in Section 2.1.
    Program Guidelines means collectively the Audit Guidelines, the MCC 
Environmental Guidelines, the MCC Gender Policy, the Governance 
Guidelines, Guidelines for Country Contributions, the MCC Program 
Procurement Guidelines, the Reporting Guidelines, the MCC M&E Policy, 
the MCC Cost Principles for Government Affiliates Involved in Compact 
Implementation, the MCC Program Closure Guidelines (including any 
successor to any of the foregoing) and any other guidelines, policies 
or guidance papers relating to the administration of MCC-funded compact 
programs and as from time to time published on the MCC Web site.
    Program Implementation Agreement and PIA have the meaning provided 
in Section 3.1.
    Program Objective has the meaning provided in Section 1.2.
    Project(s) has the meaning provided in Section 1.2.
    Project Objective(s) has the meaning provided in Section 1.3.
    Provider has the meaning provided in Section 3.7(c).
    RDD has the meaning provided in paragraph 4(a)(i)(1) of Annex III.
    Reimbursable VAT and Excise Tax Expense has the meaning provided in 
Schedule A of Annex VI.
    Reporting Guidelines means the ``MCC Guidance on Quarterly MCA 
Disbursement Request and Reporting Package'' posted by MCC on the MCC 
Web site or otherwise publicly made available.
    School O&M Plan has the meaning provided in paragraph 1(a)(i) of 
Part B of Annex I.
    Social and Gender Integration Plan has the meaning provided in 
paragraph 3 of Part A of Annex I.
    Socially Vulnerable means students (i) from high mountainous 
regions, (ii) from the occupied territories, (iii) from Azeri/Armenian 
language schools, (iv) whose parent died in battles for the territorial 
integrity of Georgia, (v) whose ancestors (being citizens of Samtskhe-
Javakheti) were deported from Georgia during the Soviet period, (vi) 
who are orphans, (vii) from families that have 4 or more children, 
(viii) with acute physical disabilities, (ix) whose families are 
registered in unified data base for socially vulnerable individuals 
with a reintegration score below a certain threshold, (x) from villages 
bordering occupied territories, and (xi) under State custody.
    Stakeholders' Committee has the meaning provided in paragraph 1(d) 
of Part C of Annex I.
    STEM has the meaning provided in Section 1.2.
    STEM Higher Education Project means the Project described in 
paragraph 3 of Part B of Annex I and whose Project Objectives are 
outlined in Section 1.3(c).
    Supervisory Board has the meaning provided in paragraph 1(a) of 
Part C of Annex I.
    Supplemental Agreement means any agreement between (i) the 
Government (or any Government affiliate, including MCA-Georgia) and MCC 
(including, but not limited to, the PIA), or (ii) MCC and/or the 
Government (or any Government affiliate, including MCA-Georgia), on the 
one hand, and any third party, on the other hand, including any of the 
Providers, in each case, setting forth the details of any funding, 
implementing or other arrangements in furtherance of, and in compliance 
with, this Compact.
    Target has the meaning provided in paragraph 3(a) of Annex III.
    Taxes has the meaning provided in Section 2.8(a).
    TPDC has the meaning provided in paragraph 1(a)(ii) of Part B of 
Annex I.
    TVET has the meaning provided in paragraph 2(a) of Part B of Annex 
I.

[[Page 48500]]

    United States Dollars or US$ means the lawful currency of the 
United States of America.
    USAID means the United States Agency for International Development.
    VAT and Excise Tax Account has the meaning provided in Schedule A 
of Annex VI.

Annex VI Tax Provisions

Schedule A Co-Financing of Value Added Tax (Vat) and Excise Taxes

Legal Basis for Co-Financing

1. The Compact
2. The Tax Code of Georgia

Beneficiaries of Co-Financing

1. MCA-Georgia
2. Implementing Entities, Providers, and contractors under the Compact

Procedures

    The Ministry of Finance (the ``Ministry'') will establish a 
separate account (the ``VAT and Excise Tax Account'') at the State 
Treasury and provide MCA-Georgia or its designated agent regular 
withdrawal access to the account. MCA-Georgia will identify its 
authorized representatives or agents to the Ministry in writing.
    No later than August 15 of each calendar year, MCA-Georgia will 
provide the Ministry with an estimate of the amount of Reimbursable VAT 
and Excise Tax Expenses (defined below) for the next calendar year. The 
Ministry will ensure that provisions for such expenses are made in the 
State budget. Transactions valued at less than US$500 will not be 
subject to co-financing or reimbursement of VAT or excise taxes.
    The Ministry will deposit the total amount of the forecasted annual 
Reimbursable VAT and Excise Tax Expenses in the VAT and Excise Tax 
Account within seven calendar days of Parliamentary approval of the 
State budget. The state-budgeted expenses notwithstanding, the Ministry 
will deposit further funds in the VAT and Excise Tax Account (if 
necessary) from time to time to ensure that funds are at all times 
available to make the payments required below.
    MCA-Georgia or its designated representative will withdraw sums out 
of the VAT and Excise Tax Account as needed to pay Reimbursable VAT and 
Excise Tax Expenses. Payments will be made through the State Treasury. 
MCA-Georgia will present the State Treasury a tax order authenticated 
with valid signatures of two permitted signatories and the MCA-Georgia 
seal for each withdrawal, as provided in the regulations on non-cash 
settlements approved by National Bank order N220 of September 2, 1999. 
The Ministry will ensure that funds in the amount of the Reimbursable 
VAT and Excise Tax Expenses are transferred from the State Treasury to 
MCA-Georgia or as directed by MCA-Georgia. MCA-Georgia or its 
designated representative will be entitled to receive from the State 
Treasury complete activity reports regarding the VAT and Excise Tax 
Account on a monthly basis or at such other periodic basis as the MCA-
Georgia and the Ministry may agree.
    At least fifteen (15) calendar days prior to the commencement of 
each calendar quarter, MCA-Georgia or its designated agent will submit 
to the Ministry a copy of the quarterly Financial Plan which will 
forecast for the following calendar quarter and identify, in Georgia 
Lari, any VAT or excise taxes imposed on goods, labor and services 
procured by MCA-Georgia, Implementing Entities, Providers, and 
contractors under the Compact (``Reimbursable VAT and Excise Tax 
Expense''). No later than fifteen (15) calendar days after the end of 
each calendar quarter, MCA-Georgia or its designated representative 
will submit a report to the Ministry accounting for all payments out of 
the VAT and Excise Tax Account during the preceding quarter.
    Each of the Ministry, MCA-Georgia, and MCC may audit the VAT and 
Excise Tax Account from time to time. The Parties will cooperate in any 
such audit.
    In accordance with Section 2.8 of the Compact, the Government will 
reimburse Taxes paid in each case in which there are insufficient funds 
for the payment of VAT or excise tax for any reason, including in the 
event that the actual amount of the Reimbursable VAT and Excise Tax 
Expense exceeds the amount estimated by MCA-Georgia and budgeted for in 
the state budget. The Government hereby acknowledges that it will 
ensure that each Government affiliate and each other governmental body 
makes a good faith effort to implement and recognize the exemptions 
from Taxes contemplated under Section 2.8 of the Compact. Following the 
entry into force of the Compact, the Government will reimburse all 
Reimbursable VAT and Excise Tax Expenses that relate to Compact 
Implementation Funding disbursed prior to the entry into force of the 
Compact.

Schedule B Tax Exemption

Legal Basis for Co-Financing.

1. The Compact
2. The Tax Code of Georgia

Beneficiaries of Co-Financing

1. MCA-Georgia
2. Implementing Entities, Providers, and contractors under the Compact

Exempt Taxes

1. Corporate Income Tax
2. Personal Income Tax
3. Profit Tax
4. Property Tax
5. Withholding Tax
6. Other Taxes

Procedures

    In accordance with Section 2.8 of the Compact the Ministry will 
ensure that all MCC Funding and GRDF Funding are exempt from any Taxes 
during the Compact Term. Such exemption applies to any use of MCC 
Funding or GRDF Funding, and for the avoidance of doubt, to any 
activities and work performed, and supplies used or purchased, in the 
implementation of the Compact, by any person or organization (including 
contractors and grantees) funded by MCC Funding and GRDF Funding as set 
forth in accordance with Section 2.8 of the Compact.
    MCA-Georgia will be free from any Taxes as set forth in Section 2.8 
of the Compact. The Ministry will issue a tax exemption letter to MCA-
Georgia evidencing such exemption from Taxes (other than VAT and excise 
tax), as promptly as possible and in no event later than thirty (30) 
days following the ratification of the Compact.
    In order to implement this tax exemption the Ministry will from 
time to time execute and deliver, or cause to be executed and 
delivered, such other instructions, instruments or documents, and to 
take or cause to be taken such other action, as may be necessary or 
appropriate.
    From time to time MCA-Georgia will provide to the Ministry a list 
of Implementing Entities, Providers, and contractors, receiving MCC 
Funding or GRDF Funding with which MCA-Georgia is doing business or 
with which it is planning to do business. The list will state, for each 
Implementing Entity, Provider, or contractor, the length of time of the 
engagement of such Implementing Entity, Provider, or contractor. The 
Ministry will be responsible for publishing the list on a public Web 
site and updating the list from time to time.
    In accordance with Section 2.8 of the Compact, the Government will 
reimburse Taxes paid attributable to work performed in connection with 
the Program or the activities of GRDF in each case in which an entity 
named on the list published by the Ministry does

[[Page 48501]]

not receive the benefit of the tax exemption by the tax and customs 
authorities. The Government hereby acknowledges that it will ensure 
that each Government affiliate and each other governmental body makes a 
good faith effort to implement and recognize the exemptions from Taxes 
contemplated under Section 2.8 of the Compact. Following the entry into 
force of the Compact, the Government will reimburse all Taxes that 
relate to Compact Implementation Funding disbursed prior to the entry 
into force of the Compact.

Schedule C Import Taxes

Legal Basis for Co-Financing

1. The Compact
2. The Tax Code of Georgia

Beneficiaries of Co-Financing

1. MCA-Georgia
2. Implementing Entities, Providers, and contractors under the Compact

Exempt Taxes

1. Import Taxes

Procedures

    When applicable, MCA-Georgia shall issue a letter to Implementing 
Entities, Providers, and contractors receiving MCC Funding or GRDF 
Funding with which MCA-Georgia is doing business or with which it is 
planning to do business, stating that specific goods are imported or 
shall be imported by the named entity in connection with the works 
performed in the framework of the Program or the activities of GRDF.
    In accordance with Section 2.8 of the Compact, the Government will 
reimburse import taxes paid attributable to work performed in 
connection with the Program or the activities of GRDF in each case in 
which the letter described above is not accepted or recognized by the 
tax and customs authorities. Following the entry into force of the 
Compact, the Government will reimburse all import taxes that relate to 
Compact Implementation Funding disbursed prior to the entry into force 
of the Compact.
[FR Doc. 2013-19136 Filed 8-7-13; 8:45 am]
BILLING CODE 9211-03-P